Nigeria’s foreign exchange market is showing signs of a significant recovery, with net inflows rising from $950 million in 2022 to $9.22 billion in January 2026, an increase of approximately 871 per cent. The development points to a stronger supply of foreign currency in the economy, although questions remain about the sustainability of the improvement.

Data from the Central Bank of Nigeria (CBN), reported by BusinessDay on November 9, show that January’s net foreign exchange inflow was almost three times the $3.11 billion recorded in December 2025. Aggregate foreign exchange inflows also increased by 45.24 per cent to $12.23 billion, from $8.42 billion in the preceding month, while lower outflows helped strengthen the net position.

The improvement has been supported by stronger foreign participation, crude oil receipts and other sources of dollar supply. Foreign portfolio inflows, which represent investments in financial assets such as government securities and equities, rose to $15.8 billion in the first nine months of 2026, compared with $12.2 billion during the corresponding period of 2025.

Nigeria’s external reserves have also strengthened, gaining approximately $6.5 billion over five months to reach $54.9 billion at the end of September 2026. Together, these figures suggest an improvement in the country’s external liquidity position and its capacity to meet foreign currency obligations.

The broader trend is also reflected in the CBN’s second-quarter figures. Nigeria’s net foreign exchange flows increased by 5.5 per cent to $22.50 billion in the second quarter of 2026, from $21.33 billion in the first quarter. Interestingly, the improvement came as outflows declined more sharply than inflows, indicating that the reduction in foreign currency leaving the economy played a significant role in strengthening the net position.

The figures also showed that foreign portfolio investment rose by 45 per cent to $6.51 billion in the second quarter, from $4.49 billion in the first. However, foreign direct investment remained a concern, with National Bureau of Statistics data indicating a decline in the first quarter of the year.

For businesses, improved foreign exchange liquidity could offer a more predictable environment for transactions involving imported raw materials, equipment, technology and other international payments. It could also support investor confidence and make financial planning less vulnerable to the sharp currency pressures experienced during periods of acute dollar scarcity.

The implications extend to sectors such as manufacturing, telecommunications, technology and advertising, where access to foreign currency can influence the cost of equipment, software, digital services and other operational requirements. However, stronger aggregate inflows do not automatically translate into equal access to dollars for every business. The availability and cost of foreign currency will continue to depend on market conditions and the channels through which it enters the economy.

There are also reasons for caution. The International Monetary Fund (IMF) has warned that Nigeria’s growing dependence on foreign portfolio investments exposes the economy to the risk of sudden capital reversals. Unlike longer-term investments in productive businesses, portfolio funds can move quickly in response to changing global interest rates, investor sentiment and emerging-market risks.

The challenge, therefore, is to convert the current improvement into a more durable source of economic stability. Stronger non-oil exports, increased foreign direct investment, consistent diaspora remittances and a more competitive business environment will be important in broadening the country’s sources of foreign exchange.

Nigeria’s rising net inflows represent an important shift in its foreign exchange position. However, the bigger measure of success will not simply be how much foreign currency enters the economy. It will be whether the country can sustain those inflows, reduce its vulnerability to external shocks and translate improved liquidity into greater certainty for businesses and investors.

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