Dollar Flood Hits Nigeria: Forex Inflows Surge, Giving Naira Fresh Lifeline
- Nigeria's net dollar inflows reached a multibillion dollar level in 2025, a 12.3% increase year on year
- Despite rising outflows, Nigeria's forex position remained positive, indicating stabilising external flows
- August 2025 saw a significant dip in net inflows, attributed to weaker autonomous sources
Nigeria’s foreign exchange position received a major lift in 2025 as net dollar inflows into the economy climbed to $41.73 billion within the first eight months of the year.
Data from the Central Bank of Nigeria shows this represents a 12.3 percent year on year increase compared with $37.14 billion recorded in the same period of 2024.
Source: Getty Images
The stronger inflow has helped improve sentiment around the naira, which has faced intense pressure from import demand, capital outflows, and global tightening conditions over the past two years.
Strong inflows offset rising outflows
An analysis of the CBN’s monthly economic reports indicates that the improvement in net inflows was driven mainly by a sharp rise in total foreign exchange inflows into the economy.
Gross inflows jumped by 21.3% to $74.14 billion in the first eight months of 2025, up from $61.09 billion in the corresponding period of last year.
This increase was strong enough to offset a significant rise in forex outflows. Outflows expanded by 34.4% year on year to $32.2 billion from $23.95 billion in the same period of 2024, reflecting sustained demand for foreign currency by businesses, investors, and importers.
Despite the higher outflows, the net position remained positive, reinforcing the view that Nigeria’s external flows are gradually stabilising.
Quarterly trend shows mild softening
While the year-to-date numbers remain encouraging, quarterly data show a slight moderation in momentum.
Net foreign exchange inflow declined by 4.14 per cent quarter on quarter to $14.57 billion in the second quarter of 2025, compared with $15.2 billion recorded in the first quarter.
Analysts attribute the slowdown to seasonal factors, portfolio flow adjustments, and cautious investor positioning amid global market uncertainty.
However, the overall level of inflows remains significantly stronger than last year.
August sees a sharp monthly drop
The CBN noted a notable dip in net inflows in August 2025, when net foreign exchange inflow fell to $3.74 billion from $8.22 billion in July.
The apex bank explained that the decline was largely due to weaker inflows from autonomous sources.
Aggregate forex inflow dropped to $7.09 billion in August from $10.67 billion in the previous month, while aggregate outflow rose to $3.36 billion from $2.46 billion.
This combination resulted in the much lower net inflow figure for the month.
Banks and autonomous sources under pressure
Foreign exchange flows through the banking system also weakened. Inflows through the CBN declined to $3.04 billion from $4.29 billion in July, while outflows increased to $1.94 billion from $1.37 billion.
This left the bank with a net inflow of $1.10 billion, down sharply from $2.92 billion a month earlier.
Autonomous sources such as exporters, investors, and remittance inflows also slowed.
Inflows dropped to $4.05 billion from $6.39 billion, while outflows stood at $1.42 billion. As a result, net inflow from autonomous sources fell to $2.64 billion from $5.30 billion in July.
Outlook for the Naira
Despite recent monthly volatility, the strong year-to-date inflow suggests improving confidence in Nigeria’s forex market.
Source: Getty Images
Sustaining this momentum will depend on export growth, remittance stability, and consistent monetary policy, all of which remain critical to keeping the naira supported through the rest of 2025.
Naira suffers sharpest fall as dollar scarcity deepens
Legit.ng earlier reported that the Nigerian naira recorded its steepest depreciation in recent weeks at the official foreign exchange window, as persistent dollar shortages intensified pressure on the local currency.
Despite renewed intervention by the Central Bank of Nigeria, demand for foreign exchange continued to outstrip supply, pushing the naira to weaker levels against the US dollar.
Market signals now point more clearly to sustained foreign exchange stress, with liquidity constraints limiting the effectiveness of regulatory support and inflows failing to calm the market.
Source: Legit.ng
