Dollar Inflow Surges by 62% to $5.96 Billion in May as US Moves to Impose Tax on Remittances

• Foreign exchange inflows into the Nigerian economy have increased by 62% to $596 billion in May 2025
• Data from the FMDQ Exchange shows that the increase was caused by strong domestic participation in the forex market
• The development led to the naira appreciating by over two per cent to N1,551 per dollar in the Nigerian Foreign Exchange Market (NFEM) 

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

Foreign exchange inflows into Nigeria rose by 62% per month to $5.96 billion in May 2025, as the Nigerian currency, the naira, appreciated N551 per dollar due to renewed investor confidence and robust domestic participation in the FX market.

FMDQ data indicates that the increase, which rose from $3.67 billion in April, was caused by a significant increase in contributions from local sources, which accounted for 83.2%.

Importers, exporters contribute to inflow surge

Domestic inflows rose to a six-year high of 64.2% to $4.96 billion, driven by increased activities from exporters and importers, non-bank corporates and individuals.

According to the data, inflows from exporters and importers surged to $3.11 billion, a sharp rise from $655.7 million in April 2025.

Non-bank corporates contributed about $1.11 billion in May relative to the previous month’s figure of $1 billion, while individual inflows hit $91.4 million from $151.1 million the previous month.

The data said that inflows from the Central Bank of Nigeria (CBN) thawed to $649.8 million from $1.35 billion in the previous month.

Foreign inflows rose by 5.7% to $997.6 million, the highest in three months, showing confidence among offshore investors.

Investors show confidence as the naira gains

According to reports, foreign portfolio investments increased by 61.3% to $880.8 million, while other corporates increased by 10.0% to $83.9 million.

However, foreign direct investment (FDI) dropped slightly by 6.3% to $880.8 million.

Experts say that the renewed interest from investors is due to CBN’s monetary policies and sustained OMO sales, which have continued to offer alternative yields.

Last week, the naira appreciated against the dollar by 2.3% per week to N1,551 per dollar, aided by increased supply from foreign portfolio investors who were seeking to participate in the OMO sales.

US moves to cut foreign remittances to Nigeria

Legit.ng earlier reported that the United States government proposed a bill to tax remittances sent from the country to other countries, including Nigeria, which experts say may pose a setback for the affected countries.

The bill seeks to impose a 3.5% tax on remittances and the money sent by migrants to their home countries and might affect about 40 million non-US citizens, including green card holders, temporary workers and undocumented immigrants.

According to reports, the bill has passed the US House of Representatives, and if implemented, Nigeria will lose about $215 million in remittances from the US.

Source: Legit.ng