CBN Sells $574m to Boost FX Market Liquidity in August

The Central Bank of Nigeria (CBN) ramped up its dollar sales in August 2025, selling a total of $574 million in a bid to stabilise the foreign exchange (FX) market amid waning inflows from key sources.

This represents a 76 percent increase from the $326 million sold in July, marking a strong intervention effort by the apex bank to cushion liquidity pressures in the face of tightening FX supply.

Data sourced from FMDQ Exchange reveals that total FX inflows into Nigeria’s foreign exchange market fell by 12 percent month-on-month (m/m) to $3.4 billion in August, down from $3.8 billion in July. The decline comes after a brief uptick in inflows in July, which saw a 24 percent m/m rise.

The drop in August was largely attributed to a sharp pullback in foreign portfolio inflows (FPIs), which fell to $1.1 billion from $1.7 billion in the previous month, a 35 percent contraction.

Analysts at FBNQuest noted that the moderation in FX supply from offshore investors underscores the vulnerability of this source of liquidity, particularly in the face of persisting global uncertainties that continue to heighten risk aversion. Despite the decline, FPIs remained the single largest source of FX liquidity, contributing approximately 86 percent of total foreign-sourced FX and 32 percent of overall inflows.

Within the FPI segment, fixed-income instruments accounted for the lion’s share of capital flows, attracting $951 million, or about 87 percent of total portfolio inflows. Equity-related inflows, in contrast, stood at a relatively modest $139 million. Meanwhile, foreign direct investment (FDI) flows remained depressed, plunging to just $22 million from $49 million in July, reflecting continued investor caution and structural challenges facing Nigeria’s investment climate.

On the domestic front, FX inflows from non-bank corporates, which made up about 25 percent of total FX supply, declined sharply by 28 percent m/m to $826 million, compared to $1.2 billion in July.

However, there was a modest uptick in FX receipts from exporters, which increased to $654 million from $583 million the previous month. While still trailing portfolio flows in scale, export proceeds are viewed as a more stable and less volatile source of FX, with the analysts stressing the importance of scaling up Nigeria’s domestic export capacity to ensure long-term improvements in FX earnings.

Despite the near-term volatility in FX inflows, FBNQuest analysts remain cautiously optimistic, noting that overall FX liquidity trends in 2025 point to an improvement compared to the previous year. The CBN’s stepped-up interventions, combined with targeted efforts to boost non-oil exports and attract more stable sources of FX, are expected to play a crucial role in supporting market stability moving forward.

The naira on Wednesday weakened by N9.88 against the dollar at the official foreign exchange (FX) market, even as Nigeria’s external reserves continued to rise.

Data released by the Central Bank of Nigeria (CBN) showed that the naira depreciated by 0.7 percent, with the dollar quoted at N1,494.01 compared to N1,484.13 on the previous day at the Nigerian Foreign Exchange Market (NFEM).

In the parallel market, also known as the black market, the naira traded steadily at N1,525 per dollar, while Guaranty Trust Bank (GTBank) maintained its rate at N1,515 per dollar for international transactions.

Nigeria’s external reserves climbed to $41.89 billion as of September 16, 2025, representing a 2.27 percent increase compared to $40.96 billion recorded on August 18, 2025, according to CBN data.