Naira gains as foreign capital inflows hit record $21bn
The naira ended the week with an increase of N7.10 in the official foreign exchange market, coinciding with a rise in foreign capital inflows, which approached $21 billion during the first 10 months of 2025.
This influx represents one of the most robust investment recoveries Nigeria has seen in years. The currency's performance over the five trading days showcased renewed confidence from foreign investors, bolstered by recent policy reforms and improving macroeconomic conditions.
Following the trading session on Friday, the naira rose by 0.5 percent, with the dollar officially priced at N1,446.74, compared to N1,453.84 at the beginning of the week, according to information released by the Central Bank of Nigeria. Although the currency experienced a slight dip of 0.2 percent from N1,443.90 at Thursday's closing, it nonetheless achieved a stronger overall performance for the week.
On a week-on-week comparison, the currency appreciated by N9.98 or 0.7 percent relative to the closing rate of N1,456.72 from the same Friday the previous week.
Conversely, in the parallel market, the naira saw a minor decline of N5, closing at N1,465 on Friday in contrast to N1,460 on Monday. Traders attributed this shift to short-term demand pressures within the informal market segment.
At the Bankers Dinner in Lagos on Friday, Olayemi Cardoso, Governor of the CBN, revealed that foreign capital inflows amounted to $20.98 billion from January to October 2025. This total indicates a 70 percent rise over the inflows of 2024 and an impressive 428 percent increase from the $3.9 billion recorded in 2023.
He characterized this growth as a clear revival in investor confidence and confirmed that as of October, Nigeria had received $21 billion in foreign portfolio investments, marking the highest annual level ever achieved.
Tilewa Adebajo, CEO of CFG Advisory, mentioned that based on their projections utilizing data from the second and third quarters of 2025, Nigeria was on track to exceed $20 billion in foreign portfolio investment for the year, surpassing the prior record of $16 billion set in 2019.
He emphasized that while foreign portfolio investments have shown consistent interest in money market instruments and bonds over the last decade, there has been a significant decline in equity investments. Despite the substantial inflows, Adebajo cautioned that the government is under pressure to maintain reform progress and address Nigeria's ongoing security issues, which he identified as a direct threat to the economy.
He further stated that the government must enforce fiscal discipline and implement policies that can stimulate long-term economic growth that positively affects citizens' living standards.
In his keynote address at the Chartered Institute of Bankers of Nigeria’s 60th Annual Bankers Dinner, Cardoso noted that a key indication of renewed economic confidence is the changes seen in the foreign exchange market. He elaborated that the unification of multiple exchange-rate windows has been consistently maintained over the past year and that the earlier burdensome multi-billion-dollar FX backlog has been entirely resolved, a development he stated has restored credibility and allowed businesses to plan with more assurance. He highlighted the introduction of the Nigerian Foreign Exchange Code, which established new benchmarks for transparency, ethics, governance, and fair dealings among authorized dealers. He also mentioned the implementation of the Electronic Foreign Exchange Management System powered by Bloomberg BMatch, which has enhanced FX trading through compulsory order submissions, real-time regulatory oversight, and improved price discovery.
According to him, these reforms have decreased opacity, reduced manipulation, and reinstituted discipline in the market. He asserted that the naira now trades within a more stable and narrower range, with the gap between the official and parallel markets narrowing to under 2 percent from over 60 percent in the past.
Cardoso also noted the improvement in the external sector, highlighting that Nigeria’s current account balance surged over 85 percent, reaching $5.28 billion in the second quarter of 2025, compared to $2.85 billion in the first quarter.
By mid-November, foreign reserves increased to $46.7 billion, marking the highest level in nearly seven years and providing more than 10 months of import cover, which significantly bolstered the economy's resilience. He pointed out that the rise in reserves was “organic,” resulting from better market performance, enhanced non-oil exports, and increased capital inflows rather than from external borrowing.
He mentioned that while there was a slight improvement in oil production, averaging between 1.45 million and 1.52 million barrels per day in 2025, the exceptional growth came from non-oil exports, which rose by over 18 percent year-on-year. Cardoso credited this growth to ongoing reforms and improved exchange-rate flexibility, which boosted competitiveness under a market-based foreign exchange regime. Remittances from the diaspora also showed strong growth, increasing by approximately 12 percent as confidence in official channels improved due to advancements in transparency, settlement efficiency, and reporting. He noted that the newly introduced Non-Resident BVN is anticipated to further enhance remittance flows as adoption grows in 2026.
Cardoso reiterated the Central Bank of Nigeria’s commitment to upholding a flexible exchange-rate system that allows the naira to act as a shock absorber while keeping excessive volatility in check. To further enhance this system, he mentioned that the CBN will soon release a revised FX Manual aimed at increasing market participation, tightening documentation standards, and improving oversight through the EFEMS platform to ensure consistent policy implementation and prevent reversals.
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