SAT SEPT 12 2026-theGBJournal| The naira weakened 0.5% week-on-week to N1,327.33 per dollar, pressured by modestly stronger dollar demand from both local and offshore market participants, even as improving foreign-currency inflows continued to strengthen liquidity conditions in Nigeria’s foreign exchange market.
At the parallel Bureau de Change (BDC) market, the naira was broadly stable at N1,385 per dollar, leaving a relatively wide gap with the official market rate and highlighting continued differences in pricing across segments of the FX market.
The naira, however, strengthened across the forward curve, suggesting that market expectations for medium-term currency conditions remained relatively constructive.
The one-month contract appreciated by 6 basis points to N1,349.70 per dollar, while the three-month and six-month contracts gained 3 basis points and 2 basis points to N1,368.65 and N1,439.29, respectively.
The one-year contract recorded the strongest improvement, rising 23 basis points to N1,542.825 per dollar.
Meanwhile, data from FMDQ showed a sharp improvement in foreign-exchange supply, with total inflows into the Nigerian Foreign Exchange Market (NFEM) rising 28.6% month-on-month to $6.68 billion in August, the highest level in 16 months, from $5.20 billion in July.
The increase was driven predominantly by foreign investors, whose inflows almost doubled during the month and more than offset weaker domestic flows.
Foreign inflows rose 97.0% month-on-month to a record $3.68 billion, accounting for 55.1% of total NFEM inflows, compared with $1.87 billion in July.
The surge was led by portfolio investment, which increased 113.3% month-on-month, while inflows from other corporates rose 47.7%.
Foreign direct investment was the notable exception, falling 80.7% during the month.
Within portfolio flows, fixed-income investment remained the key driver, with inflows jumping 103.4% month-on-month, while equity inflows surged 438.9%.
The sharp increase points to renewed foreign appetite for Nigerian financial assets, particularly fixed income, where relatively high domestic yields continue to offer attractive returns for investors willing to take on currency risk.
The stronger foreign participation also suggests that Nigeria’s carry-trade proposition remains supportive of FX liquidity, while sustained demand for domestic securities indicates improving investor confidence in the country’s financial markets.
However, the extent to which these inflows translate into sustained naira stability will depend on their persistence and the balance between portfolio flows and underlying trade and investment-related FX demand.
Domestic inflows, meanwhile, moved in the opposite direction, falling 9.9% month-on-month to $3.00 billion from $3.33 billion, and accounted for 44.9% of total NFEM inflows.
The decline reflected weaker flows from the Central Bank of Nigeria, which fell 29.1%, individuals, down 17.2%, and exporters, down 1.8%. These declines more than offset a 15.4% increase in inflows from non-bank corporates.
The contrasting performance of foreign and domestic flows underscores the growing importance of foreign portfolio capital to near-term FX liquidity.
While the rise in foreign inflows is supportive of the naira, the increased reliance on portfolio investment also leaves the currency more exposed to shifts in global risk appetite, interest-rate expectations and investor positioning.
External buffers also strengthened. Gross foreign-exchange reserves rose by $215.14 million to $54.41 billion as of September 10, providing additional support for the Central Bank of Nigeria’s capacity to manage periods of heightened FX demand and reinforcing the broader improvement in the country’s external liquidity position.
Taken together, stronger foreign inflows, rising reserves and gains across the forward curve point to improving underlying FX conditions, although the naira’s weekly decline shows that stronger supply has yet to fully eliminate bouts of dollar demand in the spot market.
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