Nigeria FX Inflows Hit $4.4bn But Market Strength in Doubt

Nigeria's foreign exchange market recorded a sharp revival in July, with total FX inflows surging 59 percent month-on-month to $4.4 billion, according to FMDQ data cited by Independent Newspaper Nigeria on August 10, 2026. The rebound was driven overwhelmingly by domestic sources, which more than doubled their dollar supply.

Domestic players accounted for roughly two-thirds of total inflows, reshaping where Nigeria's dollar liquidity comes from as foreign portfolio investors remained cautious.

Domestic Sources Surge

Aggregate inflows from domestic sources more than doubled to $2.9 billion in July, compared with about $1.3 billion in June. The Central Bank of Nigeria was the largest contributor, with FX sales rising sharply to $1.4 billion from an estimated $320 million in June.

Exporters' proceeds rose to $905.1 million from $867.9 million, supported by higher crude oil production and firm international oil prices. Local corporates also increased their contribution, with inflows rising 38 percent month-on-month to $579.5 million from $420.2 million.

Foreign Flows Shift Composition

Foreign sources of FX supply remained broadly stable at about $1.5 billion. Foreign portfolio inflows moderated to $1.3 billion, down from about $1.4 billion in June. Foreign Direct Investment surged to $129.9 million from just $19.2 million, signalling renewed long-term investor interest even as portfolio flows cooled.

Record Weekly Turnover Sparks Debate

The monthly figures came alongside a striking weekly milestone. Nigeria's FX market recorded total spot and derivatives turnover of $4.375 billion in the week ended July 24, 2026, the first weekly reading above $4 billion that year. The figure was 83.38 percent higher than the $2.386 billion reported the preceding week.

Dele Oye, Chairman of the Alliance for Economic Research and Ethics, warned that the record turnover should not be mistaken for evidence of a stronger and more resilient market. He noted that forward contracts rose more than 333 percent, from $14.5 million to $62.87 million, pointing to growing hedging concerns rather than deepening confidence.

Market participants linked the exceptional week partly to Dangote Petroleum Refinery's temporary shift to dollar pricing for petrol, diesel, and aviation fuel, announced on July 14 and reversed after about a week.

Liquidity or Illusion?

The July data shows domestic sources supplying dollars at levels not seen earlier in the year. Yet reliance on CBN sales, which jumped from $320 million to $1.4 billion in a single month, raises questions about whether the liquidity is organic or policy-driven.

Oye cautioned that unusually high turnover can reflect a temporary burst of activity triggered by a few large transactions rather than sustained improvements in fundamentals. A market can generate high turnover because it is liquid and well diversified, or because a few large participants suddenly need to buy, sell, settle, or hedge dollars.