Naira Begins Week on New Note as Foreign Investors Pour $0.93 Billion Into Nigeria
- Naira depreciated slightly to N1,363.83 per dollar amid limited US dollar liquidity pressures
- Foreign portfolio investors dominate FX inflows, contributing over half of total funds at $0.51 billion
- Nigeria's foreign reserves rose to $50.43 billion, indicating a strengthened external position and potential exchange rate stability
Pascal Oparada is a journalist with Legit.ng, covering technology, energy, stocks, investment, and the economy for over a decade.
The Nigerian naira began the new trading week on a weaker note despite a surge in foreign exchange inflows driven largely by foreign portfolio investors.
Data from the Nigerian foreign exchange market (NFEM) showed that the local currency depreciated slightly last week as pressure from limited US dollar liquidity continued to weigh on the market.
Source: Getty Images
The naira closed at N1,363.83 per dollar at the official market, compared to N1,362.21 recorded in the previous week, representing a 0.12 per cent week-on-week decline.
Naira shows mixed performance
Although the naira briefly strengthened during midweek trading to around N1,360.55/$1, it later surrendered part of those gains as demand for the US dollar intensified toward the end of the week.
The parallel market also reflected the pressure on the local currency. The naira weakened by 0.36 per cent to close at N1,405 per dollar, compared to N1,400/$1 recorded in the previous week.
According to Coronation Research, the widening gap between the official and parallel markets pushed the parallel market premium higher to 3.02 per cent from 2.77 per cent recorded earlier.
Foreign investors dominate FX inflows
Despite the mild depreciation, Nigeria’s foreign exchange market witnessed a strong inflow of funds totaling $0.93 billion.
Foreign portfolio investors (FPIs) emerged as the biggest contributors, accounting for 54.21 per cent of total inflows, equivalent to approximately $0.51 billion.
Exporters and importers contributed 27.11 per cent or about $0.25 billion, while non-bank corporates injected roughly $0.11 billion into the market.
Other corporate entities accounted for $42 million, individuals contributed around $13 million, while foreign direct investment (FDI) inflows stood at about $3 million.
Analysts believe the strong participation of FPIs reflects renewed investor confidence in Nigeria’s financial markets amid ongoing monetary reforms and improving macroeconomic conditions.
External reserves continue to rise
Nigeria’s gross foreign exchange reserves also recorded fresh gains during the period.
The reserves increased by $310.04 million to reach $50.43 billion, further strengthening the country’s external position and providing support for exchange rate stability.
Source: Getty Images
Market analysts at Coronation Merchant Bank expect the naira to trade within a relatively stable range in the coming days, supported by sustained foreign currency inflows and improving liquidity conditions across the FX market, according to a report by MarketForces Africa.
However, they warned that persistent demand pressure and global market uncertainties could still trigger short-term volatility in the value of the local currency.
Black market dollar rate jumps
Legit.ng earlier reported that Nigeria’s foreign exchange market is once again showing signs of fragmentation, as persistent demand for dollars outside official channels continues to fuel activity in the parallel market.
Checks by Daily Sun revealed that at the start of trading on Monday, the naira exchanged at N1,395 per dollar for buying and N1,400 per dollar for selling in the black market.
The rates reflect sustained demand for foreign currency among individuals and businesses unable to access dollars through the official market promptly.
Source: Legit.ng
