Analysts note that the strengthening of the naira offers some relief by easing import costs and bolstering consumer purchasing power. Still, the fluctuations in total forex inflows and outflows underscore the need for consistent monitoring and structural reforms to enhance macroeconomic resilience.
Abuja, Nigeria – Nigeria’s net foreign exchange inflow dipped to $4.79 billion in January 2025, marking a 4.49 percent decline from the $5.01 billion recorded in December 2024, according to the latest Economic Report released by the Central Bank of Nigeria (CBN).
The report, published on April 17, highlighted significant shifts in the structure of forex inflows and outflows during the period under review, with the apex bank’s contribution witnessing a sharp decline.
Autonomous Sources Surge as CBN Inflows Shrink
Foreign exchange inflows through the CBN fell steeply to $2.33 billion in January 2025, compared to $4.09 billion in December. In contrast, autonomous sources posted a strong showing, with inflows rising to $7.31 billion from $6.08 billion the previous month.
Meanwhile, aggregate forex inflows into the economy decreased slightly to $9.63 billion from $10.17 billion in December, while total outflows also declined to $4.84 billion from $5.17 billion during the same period.
Net Outflows Rise at CBN Despite Drop in Total Outflows
On the outflow side, foreign exchange through the CBN decreased to $3.80 billion, down from $4.16 billion in the previous month. However, autonomous outflows inched up slightly to $1.04 billion from $1.01 billion.
This dynamic led to a net outflow of $1.47 billion via the CBN, a substantial rise from the marginal net outflow of $0.07 billion recorded in December 2024. Conversely, autonomous sources registered a robust net inflow of $6.26 billion, improving on the $5.07 billion posted in the previous month.
Naira Strengthens Against Dollar as Market Liquidity Improves
In a positive development for Nigeria’s foreign exchange market, the naira appreciated against the US dollar in January 2025. The average exchange rate at the Nigerian Foreign Exchange Market (NFEM) improved by 1.16 percent to N1,535.94/$1, from N1,553.73/$1 in December 2024.
Further gains were recorded at the end-period exchange rate, which appreciated by 3.90 percent to close at N1,478.22/$1, compared to N1,535.82/$1 at the end of December.
Increased market activity accompanied the currency gains, with average daily turnover in the NFEM climbing 18.30 percent to $408.49 million, up from $345.30 million in the previous month. This surge reflects improved liquidity and heightened transactional confidence within the market.
Implications for the Economy
The decline in CBN-led inflows raises concerns about the sustainability of Nigeria’s balance of payments and the country’s external reserves, which rely significantly on official channels. However, the uptick in autonomous inflows suggests growing involvement from private investors and external participants, providing a cushion against the fall in official contributions.
Analysts note that the strengthening of the naira offers some relief by easing import costs and bolstering consumer purchasing power. Still, the fluctuations in total forex inflows and outflows underscore the need for consistent monitoring and structural reforms to enhance macroeconomic resilience.
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