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’Festive-Related Activities’ll Trigger Renewed Pressure On Naira - NEW TELEGRAPH
Activities usually associated with the festive season may lead to renewed demand pressure on the naira in the coming days, analysts at FBNQuest Research have said. The analysts stated this while commenting on recent data released by FMDQ which focused on developments in Nigeria’s foreign exchange market in November.
According to the analysts, the Central Bank of Nigeria (CBN), “ramped up FX sales in November amid weak supply.” They stated: “Recent data released by the FMDQ shows that total FX inflows into Nigeria’s FX market fell sharply by -67 per cent Month-on-Month (MoM) to $2.0 billion, compared with $6.1 billion in the previous month.
This represents the weakest FX supply since July 2024, when FX inflows stood at $1.9 billion. Amid persistent demand pressures, the tight liquidity in the FX market heightened volatility in the exchange rate during the review month.
As a result, the naira depreciated by -1.3 per cent MoM, closing November at $1,446.90/USD.” The analysts, who attributed the limited FX supply last month to “subdued inflows from offshore participants,” said that: “Despite the appeal of elevated interest rates, Foreign Portfolio Investors (FPIs) – typically a significant source of FX liquidity – stayed on the sidelines throughout the month, resulting in constrained dollar inflows.
Consequently, FPI inflows decreased to $593 million from $3.5 bn in the previous month, the lowest level observed since $546 million reported in April 2025.”
Further evaluating the FPI data, the analysts noted that it shows that offshore investments in fixed-income securities accounted for about 97 per cent of total offshore inflows, amounting to $575 million.
They also noted that: “Foreign Direct Investment (FDI) remained subdued, plunging to a mere $10.4 million from $221 million in the previous month, amid persistent concerns over insecurity and fiscal direction.”
Similarly, FX contributions from other foreign corporates, the analysts noted, decreased by -67 per centMoM to nearly $55 million last month.
“Given the constrained FX supply from foreign sources, the CBN maintained an active presence in the market in November, with FX sales more than doubling to $318 million from $106 million in the previous month,” the analysts stated.
