The Nigerian currency recorded significant gains last week, driven by a massive surge in foreign investment. Capital inflows into the country have hit a staggering $20.98 billion, signaling a major economic turnaround. This influx has helped stabilize the exchange rate following a period of volatility.
By the close of trading, the Naira appreciated by 0.69 percent at the official window. It finished at N1,446.74 to the US Dollar, improving from the previous rate of N1,456.72. Meanwhile, the parallel market saw a minor adjustment, easing to N1,476 per dollar.
Massive Surge in Capital Inflows
Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), highlighted these gains at the 60th Annual Bankers’ Dinner in Lagos. He revealed that foreign investments reached $20.98 billion within the first ten months of 2025.
This figure represents a dramatic recovery for the economy. Specifically, it marks a 70 percent increase over the total inflows for 2024. Furthermore, it represents a massive 428 percent spike compared to the $3.9 billion recorded in 2023. Cardoso noted that this resurgence proves investor confidence is firmly returning.
Drivers of Market Stability
Market analysts attribute the currency’s recovery to improved liquidity conditions. Investment firms report that Foreign Portfolio Investors (FPIs) are actively selling dollar positions. Consequently, this has boosted supply and reduced pressure on the local currency.
Experts at Cowry Asset Management and AIICO Capital identified three main factors driving this trend:
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Deeper Liquidity: A consistent flow of funds has stabilized supply.
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Narrow Spreads: The gap between bid and offer prices is tighter, aiding price discovery.
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Rational Pricing: The CBN’s “willing-buyer-willing-seller” model allows genuine market dynamics to prevail over panic.
Impact of FX Reforms
Governor Cardoso also emphasized the success of recent structural reforms. Key initiatives include the clearing of the FX backlog and the introduction of the Nigerian Foreign Exchange Code. Additionally, the adoption of a Bloomberg-powered electronic management system has enhanced transparency.
These measures have effectively bridged the divide between different exchange rates. “The once-substantial gap between the official and parallel markets has shrunk to under two percent,” Cardoso stated.
Future Outlook
Looking ahead, analysts maintain a cautiously optimistic outlook. While the Naira may face mild pressure due to lingering demand, rising external reserves offer a strong buffer. Therefore, market rates are expected to settle naturally as month-end inflows support the currency.
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