Exporters and non-bank corporates contributed 64 percent of total dollar inflows into the Nigerian Foreign Exchange Market (NFEM) last week, surpassing all other sources, including the Central Bank of Nigeria (CBN).
CBN only accounted for just 14.29 percent of the supply, according to a report by Coronation Asset Management.
The NFEM window recorded $1.0 billion in total inflows, a 25.4 percent decline from the $1.34 billion recorded in the previous week.
A breakdown of the inflows showed that Foreign Portfolio Investors (FPIs) accounted for 18 percent while non-bank corporates contributed 35.55 percent. Exporters brought in 28.06 percent, while other sources made up 4.10 percent.
Private Sector Drives FX Market Amid CBN’s Limited Intervention
Non-bank corporates, including manufacturing firms, oil and gas companies, telecom operators, and technology firms, played a critical role in sustaining the FX market, outpacing the CBN’s intervention.
The decline in total inflows reflects ongoing market volatility and reduced foreign capital inflows. The CBN’s intervention remains subdued, with efforts focused on stabilizing liquidity through policy reforms and transparency initiatives.
Naira Under Pressure as FX Supply Drops
Despite the contribution from non-bank entities, the naira depreciated by 0.05 percent in the official FX market, closing at N1,517.93 per dollar on Friday.
In the parallel market, the local currency fell to N1,580 per dollar, marking a N5 decline from Monday’s close of N1,575 per dollar.
Forward contract rates also reflected increased demand pressure, with the one-month rate closing at N1,577.80 per dollar, the three-month rate at N1,654.10 per dollar and the one-year rate at N1,764.98 per dollar.
CBN Pushes for Market Transparency
In response to FX market inefficiencies, the CBN introduced the Electronic Foreign Exchange Matching System (EFEMS) in October 2024 to curb speculation and improve transparency.
The Bloomberg BMatch system was also mandated for interbank FX trading in December 2024.
Market analysts have credited these initiatives with improving price discovery and reducing information asymmetry, though FX supply remains inconsistent.
Looking Ahead
With FX inflows declining and demand pressures persisting, the CBN may be forced to increase interventions to stabilize the naira. Meanwhile, exporters and non-bank corporates continue to drive liquidity, reinforcing their growing influence in Nigeria’s FX market.
