According to data from FMDQ, total inflows into the NFEM rose by 62% to $5.96 billion in May 2025, up from $3.67 billion the previous month
Forex Inflows Soar to Highest Level in Six Years, Boosts Investor Confidence
Nigeria’s domestic foreign exchange inflows have hit their highest level in six years, reflecting growing investor confidence and a steady expansion in business activities across key sectors. This is according to the latest data from the Central Bank of Nigeria (CBN) and FMDQ.
In May 2025, inflows from domestic sources into the Nigerian Foreign Exchange Market (NFEM) soared to $4.96 billion, a 64.2% increase from April’s $3.02 billion. This figure represents the highest domestic forex inflow since 2019, driven largely by the private sector, with significantly reduced dependence on the CBN.
According to data from FMDQ, total inflows into the NFEM rose by 62% to $5.96 billion in May 2025, up from $3.67 billion the previous month. Domestic sources contributed 83.2% of total inflows, while foreign sources accounted for the remaining 16.8%, reaching $997.60 million, the highest in three months.
The bulk of the domestic inflows came from exporters and importers, whose contributions jumped to $3.11 billion from $655.7 million. Non-bank corporates saw a modest rise from $1 billion to $1.11 billion, while individual inflows skyrocketed from $15.1 million to $91.4 million — signaling a renewed confidence in Nigeria’s currency market.
Interestingly, the CBN’s own contribution fell sharply, dropping by more than half from $1.35 billion in April to $649.80 million in May — highlighting a growing shift toward market-driven forex inflows.
The CBN’s Purchasing Managers’ Index (PMI) for May 2025 reaffirmed the economy’s resilience, with the composite PMI staying above the 50-point threshold for the sixth consecutive month, reflecting continued expansion.
The PMI for May stood at 52.1 points, only slightly down from 52.2 in April. Sectoral performances remained strong: Agriculture: 53.4 (vs. 53.8 in April), Industry: 51.6 (vs. 51.8) and Services: 51.7 (vs. 51.8)
Foreign inflows also surged, increasing by 51.7% to $997.60 million. A closer look reveals that foreign portfolio investors (FPIs) contributed significantly, with inflows climbing by 61.3% to $880.80 million. Inflows from foreign corporates grew by 10% to $83.9 million, while foreign direct investment (FDI) dipped slightly by 6.3% to $32.9 million.
Analysts at Cordros Capital linked the surge in inflows and sustained business expansion to a more optimistic macroeconomic environment.
“Looking ahead, we expect sustained expansion in private sector activity, underpinned by improving macroeconomic fundamentals such as a more stable naira and moderating inflation,” the analysts noted.
“Nonetheless, tight financial conditions remain a potential headwind to broader economic performance in the near term.”
They warned, however, that lingering global trade uncertainties could limit the momentum of foreign inflows, posing risks to forex liquidity.
Business leaders have also weighed in, praising the administration of President Bola Ahmed Tinubu for reforms that have reignited investor confidence and sparked positive economic momentum.
Africa’s richest man and President of Dangote Group, Alhaji Aliko Dangote, lauded the reforms, particularly in forex unification and energy deregulation, saying, “Your leadership has been both decisive and reassuring. Your actions have reignited hope for a prosperous Nigeria of today and of the future.”
“From the very start of the administration, Your Excellency has worked tirelessly to foster an enabling environment for private sector-led growth,” Dangote said.
He highlighted initiatives such as fuel subsidy removal, naira exchange rate unification, tax reform, and the Presidential Compressed Natural Gas (CNG) Initiative, adding that the reformed tax system will compel many to “run and come to Aso Rock in gratitude.”
BUA Group Chairman, Alhaji Abdulsamad Rabiu, also echoed optimism: “Under your leadership, we have witnessed real and rapid progress,” he said, citing accelerated infrastructure rollout as proof of the government’s commitment to innovation and national development.
Two of the world’s leading credit rating agencies — Moody’s Investors Service and Fitch Ratings — have responded positively to Nigeria’s reform trajectory.
Moody’s recently upgraded Nigeria’s sovereign credit rating from Caa1 to B3, citing “a more resilient fiscal position, stronger external accounts, and the government’s demonstrated commitment to macroeconomic and structural reforms.” The outlook was adjusted from “positive” to “stable.”
Fitch followed suit by upgrading Nigeria from “B-” to “B”, noting improved policy coherence, reduced economic distortions, and a renewed commitment to orthodox policies.
“The upgrade reflects increased confidence in the government’s broad commitment to policy reforms implemented since its move to orthodox economic policies in June 2023,” Fitch stated in its April 2025 report. Read More
