CBN records $6.3bn portfolio inflows, strengthens dollar position

Central Bank of Nigeria building. Photo: CBN

Nigeria’s foreign exchange position has strengthened as increased private sector dollar inflows, foreign portfolio investments and remittances boost liquidity and reduce pressure on the Central Bank of Nigeria’s direct intervention in the foreign exchange market.

The CBN said net foreign portfolio investment inflows reached $6.3bn between January and August 2026, providing a significant source of FX for the economy.

The figure was disclosed by Deputy Governor of the CBN, Muhammad Sani Abdullahi, at the 38th Seminar for Finance Correspondents and Business Editors in Abuja on Tuesday.

Abdullahi said the increase in FX supply had contributed to greater stability in the market and reduced the central bank’s reliance on direct intervention.

According to him, autonomous sources accounted for the bulk of FX inflows recorded during the period.

“Of the $10.8bn in total flows that we recorded in July this year, $7.3bn, or nearly 68 per cent, came from autonomous sources,” Abdullahi said.

Diaspora remittances have also remained an important source of foreign exchange.

Abdullahi said inflows through international money transfer operators reached about $950m in July 2026.

The continued flow of remittances through formal channels provides another source of dollar liquidity for the economy and complements foreign portfolio investments and autonomous FX inflows.

The improvement in foreign exchange supply has coincided with stronger external reserves.

The CBN said gross external reserves stood at $55.6bn as of 11 September, 2026.

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Abdullahi also highlighted the improvement in Nigeria’s net reserves, saying they had stood below $900m in 2023 after accounting for identified short-term obligations.

The stronger reserve position provides the country with a larger external liquidity buffer and increases the capacity to manage periods of pressure in the foreign exchange market.

The improvement in foreign exchange liquidity has also been accompanied by a reduction in the gap between the official and parallel market exchange rates.

According to the CBN, the average gap had narrowed to below 2.2 per cent, compared with an average of 68.2 per cent between January and May 2023.

The narrowing spread indicates that rates in the two market segments have moved significantly closer together since the reforms introduced by the apex bank.

The stronger contribution from autonomous sources has reduced the need for the CBN to rely as heavily on direct intervention to supply the FX market.

With autonomous sources accounting for almost seven out of every 10 dollars that entered the market in July, private sector flows have become an increasingly important component of Nigeria’s FX liquidity.

Abdullahi said tighter monetary policy and improved liquidity management had also contributed to the greater stability recorded in the market.

However, he cautioned that the improvement should not be interpreted as meaning that all FX pressures facing households and businesses have disappeared.

The central bank said sustaining the gains recorded so far would require continued policy discipline and efforts to deepen the sources of investment and FX supply.

“Our task is to make the improvement more durable and to deepen the sources of investment and foreign exchange supply,” Abdullahi said.