Nigeria’s foreign exchange market experienced a contraction in supply as dollar inflows fell sharply to $2 billion.
Market data reviewed by Naijaonpoint indicates that total inflows into the formal FX market retreated substantially compared to the previous month.
The downturn highlights persistent structural pressure in the market even as the Central Bank of Nigeria intensifies efforts to stabilise price formation.
The steep decline in inflows was largely driven by weak offshore participation, with foreign portfolio investors maintaining a cautious stance amid global risk repricing, elevated geopolitical uncertainties and ongoing domestic reforms.
The limited engagement from offshore accounts resulted in a subdued supply of tradeable dollars, deepening liquidity constraints within the system.
Foreign direct investment also remained muted as investors assessed the broader macroeconomic environment, while inflows from other external corporate channels were significantly lower.
Market analysts noted that investor sentiment continues to be shaped by concerns around security conditions, policy consistency and fiscal sustainability.
With external sources contributing less support, the FX market relied more heavily on domestic channels. However, supply from corporates, exporters and individuals declined as well, reflecting tighter cashflow conditions and increased dollar demand for end-of-year obligations.
Remittance contributions also moderated as seasonal inflows began to build gradually toward the peak holiday period.
The Central Bank increased its presence in the market to cushion shortfalls and sustain orderly trading conditions. Although these interventions provided temporary relief, the supply gap remained evident in pricing dynamics as the naira faced steady month-end demand pressures from manufacturers, traders and businesses settling import-related commitments.
Analysts expect the coming weeks to reflect heightened currency demand as festive-season expenditure accelerates.
However, they also anticipate that stronger reserve buffers and December-driven diaspora inflows will help reduce volatility and provide modest support to near-term liquidity.
Nigeria’s FX market remains sensitive to shifts in global capital flows and domestic confidence indicators, making sustained reforms and consistent policy execution central to restoring a more balanced and resilient supply outlook.