Foreign Portfolio Investors Account For 41.3% Of Total Inflows, External Reserves Rise To $49.93 Billion, Gap Between Official And Parallel Market Narrows To N15
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The naira weakened against the United States dollar on Monday in the Nigerian Foreign Exchange Market (NFEM) window despite a rise in foreign exchange inflows into the country’s currency market.
Data published by the Central Bank of Nigeria (CBN) showed that the naira depreciated by N12.36 during Monday’s trading session, with the dollar quoted at N1,405.62 compared with N1,393.26 recorded on Friday. This represents a 0.9 percent decline in the value of the local currency at the official market.
While the naira weakened at the official window, the currency remained relatively stable in the parallel market, commonly referred to as the black market. In that segment of the market, the naira closed at N1,420 per dollar.
The difference between the official and parallel market exchange rates narrowed further, indicating a gradual convergence between the two segments of the foreign exchange market. The gap declined to N15, representing about 1.07 percent, compared with N27 or 1.94 percent recorded at the close of trading on Friday.
The narrowing spread between the two markets is viewed by analysts as a sign of improved market alignment following ongoing reforms introduced by the Central Bank aimed at enhancing transparency and liquidity in the country’s foreign exchange market.
Recent data also show that foreign exchange inflows into the market have strengthened in recent weeks. As of the end of last week, total FX inflows into the Nigerian market settled at $1.26 billion, representing an increase of 17.76 percent compared with $1.07 billion recorded in the previous week, according to a market data released by the research department of Coronation Merchant Bank.
Foreign portfolio investors (FPIs) accounted for the largest share of the inflows, contributing $518.7 million, which represents 41.3 percent of the total inflows recorded during the period. The CBN followed with $314.2 million, accounting for 25.0 percent of the total inflows.
Exporters also played a notable role in supplying foreign exchange to the market, contributing $159.1 million, representing 12.7 percent of the total inflows. Non-bank corporates accounted for $135.5 million, or 10.7 percent, while individuals contributed $110.9 million, representing 8.8 percent of the total FX inflows.
Market analysts say the improvement in inflows is helping to provide liquidity support to the foreign exchange market, even though demand pressures have continued to influence exchange rate movements.
On the external front, Nigeria’s foreign exchange reserves have also shown modest improvement. Data published by the apex bank indicate that the country’s gross external reserves rose to $49.93 billion as of March 5, 2026.
The latest figure represents a week-on-week increase of about 0.48 percent, equivalent to an accretion of approximately $236.21 million.
The continued rise in reserves aligns with the sharp improvement recorded in the country’s net foreign exchange reserves in recent years. The Central Bank recently disclosed that net FX reserves increased to $34.8 billion at the end of 2025, compared with $3.99 billion recorded two years earlier.
According to Olayemi Cardoso, governor of the Central Bank of Nigeria, the improvement reflects stronger external sector fundamentals as well as ongoing monetary and foreign exchange policy reforms aimed at restoring confidence in Nigeria’s currency market.
Analysts expect the naira to trade within a relatively stable range in the near term, supported by sustained foreign portfolio investment inflows and improved participation by exporters in the foreign exchange market.
In addition, ongoing geopolitical tensions in global energy markets have contributed to firmer crude oil prices, a development that could further support Nigeria’s external reserves and improve foreign exchange supply in the coming months.
Last week, however, the naira recorded a weaker performance overall at the official market. The local currency depreciated by 2.14 percent week-on-week in the NFEM window, closing at N1,393.26 per dollar compared with N1,363.42 recorded in the previous week.
This followed a relatively stronger midweek performance, when the currency traded to an intraweek high of N1,387.10 per dollar before weakening toward the close of the week.
The parallel market recorded a similar trend during the period, with the naira depreciating by 2.10 percent week-on-week to close at N1,430 per dollar.
At current levels, the parallel market rate continues to trade at a modest premium relative to the official NFEM rate, with the spread estimated at about 2.64 percent. Analysts say the gradual reduction in the gap between the two markets signals progress toward greater stability and efficiency in Nigeria’s foreign exchange system as reforms continue to take effect.
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