Total inflows into the Nigerian foreign exchange (FX) market fell by 10.5 per cent month-on-month to $3.4 billion in August 2025, data released recently by FMDQ Exchange shows.
The forex inflows for the period under review was lower than the $3.8 billion recorded in July 2025, when inflows increased by 24 per cent against the preceding month (June 2025).
The decline in August was primarily driven by reduced foreign portfolio inflows (FPIs) to $1.1 billion from $1.7 billion in the previous month.
The moderation in FX supply from offshore investors highlights their fragility, as persistent global uncertainties heightened risk aversion among the offshore community.
Despite the decline last month, FPIs remained the dominant source of liquidity in the FX market, accounting for 86 per cent of FX supply from foreign sources and 32 per cent of total FX inflows.
Within the FPIs category, capital inflows into fixed-income instruments were the major source at $951 million, representing about 87 per cent of total FPIs inflows. Meanwhile, equity-related inflows accounted for the remaining $139 million.
On the other hand, inflows from foreign direct investments (FDIs) remained subdued, plunging to $22 million from $49 million.
With respect to domestic sources, inflows from non-bank corporates, which accounted for 25 per cent of total FX supply, fell by 28 per cent month-on-month to $826 million compared with $1.2 billion in July.
Notably, the CBN ramped up sales to support liquidity in the FX market amid declining supply from major sources. In August, the Bank sold $574 million, up from $326 million in the previous month.
Similarly, FX inflows from exporters gained traction in August, increasing to $654 milliofrom $583m in July.
While exporter contributions remain relatively modest compared to foreign portfolio inflows, they represent a more stable and less volatile source of FX.
Market analysts expect that increased FPIs will help bolster the market in the last quarter of the year, with the trend already established so far in September.