Nigeria recorded foreign exchange (FX) inflows of $3.0 billion in January 2026, representing a 7 per cent month-on-month increase, as elevated domestic yields continued to attract offshore portfolio investors.
Data released by the FMDQ showed that the improvement marks the second consecutive month of recovery in FX supply, reinforcing signs of gradually improving liquidity conditions that began toward the end of 2025. Portfolio flows played a central role in stabilising the market during the period.
Portfolio inflows drive growth
The increase in FX inflows was largely driven by foreign portfolio investors seeking higher returns in Nigeria’s fixed-income market.
According to the data:
Foreign portfolio investment surged by 151 per cent month-on-month to $1.6 billion.
About 98 per cent of portfolio inflows—roughly $1.5 billion—was directed into fixed-income securities, while equities attracted $38.7 million.
International corporate inflows rose by 83 per cent to $155.4 million.
Foreign direct investment recorded a marginal increase of $2 million to $50.3 million.
The figures highlight the dominant role of short-term capital in boosting liquidity, as Nigeria’s high-interest-rate environment continues to appeal to global investors, particularly in treasury bills and bonds.
Reduced pressure on the naira
Stronger offshore participation helped ease pressure on the currency market and moderated volatility in the naira, while also reducing reliance on official intervention.
The Central Bank of Nigeria (CBN) contributed just $34 million to FX supply in January, a sharp decline from $654 million recorded in December. Meanwhile, domestic sources weakened, with exporter inflows falling 15 per cent to $582 million and inflows from individuals dropping 39 per cent to $168.7 million. Non-bank corporate inflows rose slightly by 2.4 per cent to $430.4 million.
Analysts note that the evolving composition of FX supply points to growing dependence on foreign capital rather than domestic sources.
External reserves strengthen
The improvement in inflows comes amid strengthening external buffers, with Nigeria’s foreign reserves rising to about $46 billion by late January 2026—the highest level in roughly eight years. The reserve build-up has coincided with relative currency stability and improved investor confidence.
While sustained inflows could further support the naira and reduce the need for heavy intervention, experts caution that long-term stability will depend on maintaining investor confidence and converting short-term portfolio flows into more durable investment commitments.
