The latest report from FMDQ indicated that foreign exchange (FX) inflows to the Nigerian Autonomous Foreign Exchange Market (NAFEM) increased by 53.3% in January this year to $4.74 billion, up from $3.09 billion inflows in December 2024
The FMDQ attributed the huge surge in FX inflows to NAFEM primarily to the 48.8% increase in inflows from foreign sources and FX from local sources, which accounted for the 51.2% balance of the total FX inflows.
Specifically the data reflected that in January this year, the foreign FX inflows totalled $2.31 billion, representing 192.1% month-on-month (m-o-m) increase and the highest value in inflows over the past 23 months.
Analytically, the figures indicated improved investor confidence in the NAFEM and carry trade opportunities in the Nigerian capital market.
The FMDQ data showed that as a result of the positive sentiment, the FPI segment increased by 213.0% m-o-m, while inflows from other corporates marginally dropped by -45.4% and FDI recorded -36.5%/
Similarly, inflows from local sources surged by 5.6% in January to $2.43 billion when compared to $2.30 billion inflows in December 2024 largely due to 33.2% increase in inflows from individuals, 20.9% from exporters/importers, and 20.1% from CBN segments, compared to the 10.7% decline in the non-bank corporates segment.
Investment experts believe that seasonal factors like the “January effect” may have been responsible for the increased NAFEM activity as the beginning of a new year usually excite investors with the attendant positive implications for new investment allocations.
In addition, the interventions of the CBN in the forex market are believed to have helped in mitigating the volatility of the FX market, especially in its liquidity.
