Nigeria Records Strong Rebound in FX Inflows Driven by FPIs in October 2025

Nigeria’s foreign exchange (FX) flows show a strong rebound in total FX inflows into Nigeria’s FX market in October 2025, following a brief dip the previous month. Inflows increased markedly by 91% month-on-month (MoM) to around US$6.1bn, marking the highest level since May, when total inflows reached US$6.7bn. The recovery was primarily driven by renewed interest from foreign investors in domestic assets, supported by attractive carry-trade opportunities. The combination of elevated interest rates and recent policy easing by the US Federal Reserve has widened the interest rate differential between Nigeria and the US. This significant carry has reinforced Nigeria’s position as an attractive investment destination for offshore investors seeking higher yields.

• Offshore inflows more than doubled m/m (161% MoM) to US$3.5bn, accounting for around 58% of total FX inflows. Notably, inflows into fixed-income securities represented US$3.4bn of this amount.
• Conversely, FX inflows from Foreign Direct Investment (FDI) declined by 25% MoM to US$222m, highlighting persistent structural challenges in attracting long-term capital.
• These headwinds, including security concerns, regulatory uncertainties, and inconsistent policy actions, continue to weigh on foreign investor confidence.
• On the domestic front, FX contributions from individual participants increased sharply to US$602m from US$104m in the previous month.
• This significant increase underscores improved market accessibility and deeper participation by retail investors.
• Additionally, FX remittances from corporates and the exporters/importers segment rose by 25% MoM and 60% MoM to US$791m and US$683m, respectively.
• Buoyed by improved FX liquidity from offshore inflows and other domestic sources, the CBN scaled back its participation in the FX market, with sales plunging by around 60% MoM to US$106m. 
• Despite expectations of an additional rate cut by the MPC later this month, we anticipate sustained foreign portfolio inflows, supported by attractive interest rate differentials (see chart below)   

Source: Proshare.co