Nigeria’s foreign exchange market has received its strongest boost in six years, driven largely by a surge in private sector inflows and renewed investor confidence, according to new data from the Central Bank of Nigeria (CBN) and market analysts.
The total foreign exchange (forex) inflow into the Nigerian Foreign Exchange Market (NFEM) rose sharply by 62% from $3.67 billion in April to $5.96 billion in May 2025. This significant uptick was powered mainly by domestic sources, which contributed over 83% of total inflows — their highest level since 2019.
The CBN’s latest Purchasing Managers’ Index (PMI) report further indicates sustained economic activity, with the composite PMI remaining above the 50-point threshold for the sixth consecutive month. The May PMI came in at 52.1 points, slightly below April’s 52.2, reflecting steady, albeit modest, business expansion across key sectors such as agriculture, industry, and services.
Domestic Inflows Lead the Way
According to data from FMDQ, domestic inflows climbed by 64.2%, reaching $4.96 billion in May. A major share of this came from exporters and importers, whose contributions surged from $655.7 million to $3.11 billion. Inflows from non-bank corporates rose to $1.11 billion, while individual contributions jumped from $15.1 million to $91.4 million — a sign of growing retail confidence in the forex market.
Conversely, inflows from the CBN dropped by more than half, from $1.35 billion in April to $649.8 million in May, signaling a deliberate move toward market-driven supply dynamics.
Foreign Participation Rebounds
Foreign contributions also saw a rebound, increasing by 51.7% to $997.6 million — the highest in three months. Notably, foreign portfolio investments (FPIs) surged by over 61% to $880.8 million, underlining improved sentiment among international investors. However, foreign direct investment (FDI) remained subdued, falling slightly by 6.3% to $32.9 million.
Analysts at Cordros Capital attributed the rise in forex inflows to growing macroeconomic stability and policy clarity. “We expect sustained expansion in private sector activity, underpinned by improving fundamentals such as a more stable naira and moderating inflation,” the firm stated. However, it warned that global trade uncertainties and tight financial conditions could still pose risks to continued momentum.
Reform Agenda Attracts Praise
President Bola Tinubu’s administration continues to receive accolades for its wide-ranging economic reforms aimed at stabilising Nigeria’s macroeconomic environment. From the unification of the naira exchange rate to the removal of fuel subsidies and promotion of the Presidential Compressed Natural Gas (CNG) Initiative, the policies are being credited with restoring investor confidence and revitalising the private sector.
Africa’s richest man, Alhaji Aliko Dangote, lauded the President’s reform push, noting that it had “reignited hope for a prosperous Nigeria.” Dangote praised Tinubu’s bold decisions, saying they were fostering an environment conducive to private-sector-led growth.
Similarly, billionaire industrialist Alhaji Abdulsamad Rabiu, Chairman of BUA Group, acknowledged “real and rapid progress” in infrastructure and economic development under the current administration.
Credit Ratings Agencies Endorse Reforms
These sentiments have been echoed by global credit ratings agencies. Moody’s Investors Service recently upgraded Nigeria’s sovereign rating from Caa1 to B3, citing fiscal consolidation and the government’s commitment to reform. It also adjusted the country’s outlook from “positive” to “stable,” projecting continued, albeit slower, progress.
Fitch Ratings also upgraded Nigeria’s rating from “B-” to “B” and affirmed a stable outlook. The agency noted improvements in policy coherence, a more credible forex regime, and reduced fiscal distortions as key factors behind the improved assessment.
Outlook
While analysts remain cautiously optimistic, the consensus is that Nigeria’s forex market is undergoing a significant transformation, led by a growing role for private sector players and increased foreign interest. If reforms are sustained and global headwinds managed, Nigeria could be on a steady path toward greater economic resilience and stronger currency stability.