By Joy Baba-Yesufu
Foreign exchange inflows into Nigeria surged by 62% month-on-month to $5.96 billion in May 2025, marking a significant rebound in the nation’s FX market. The naira also appreciated by 2.3% to N1,551/$, driven by renewed investor confidence and stronger domestic participation.
According to FMDQ data, domestic sources contributed a remarkable 83.2% of total inflows, with local FX inflows rising to a six-year high of $4.96 billion, up 64.2% from April. Exporters and importers accounted for $3.11 billion, a dramatic rise from $655.7 million in April. Non-bank corporates added $1.11 billion, while individuals contributed $91.4 million, though slightly down from $151.1 million the prior month.
Meanwhile, inflows from the Central Bank of Nigeria (CBN) fell to $649.8 million from $1.35 billion, reflecting reduced direct interventions. Foreign inflows rose modestly by 5.7% to $997.6 million, the highest in three months, indicating growing offshore investor confidence.
Foreign portfolio investments climbed by 61.3% to $880.8 million, while other corporate flows rose 10% to $83.9 million. However, foreign direct investment (FDI) dipped by 6.3% to $33 million, suggesting continued caution among long-term investors.
Experts attribute the positive FX momentum to CBN’s policy reforms and sustained Open Market Operations (OMO), which continue to offer attractive yields to investors.
In a related development, the United States government is advancing a bill to impose a 3.5% tax on remittances sent abroad. The legislation, which has passed the House of Representatives, could significantly impact countries like Nigeria. If enacted, Nigeria may lose $215 million annually in remittances from the U.S., potentially affecting diaspora inflows and household incomes.
