Non-bank corporates have surpassed foreign portfolio investors (FPIs) for two consecutive weeks, indicating improved investor confidence and a 24 percent increase in foreign exchange inflows into the country for July 2025, according to data from FMDQ.
FPIs remained the primary source of inflows overall, representing about 45% of all inflows in July.
Driven by favorable carry trade conditions and generally stable global macroeconomic factors, offshore investor inflows rose to $1.7 billion from $1.5 billion in June, reflecting cautious foreign investor enthusiasm.
The Naira held the N1,550/$ band while the haven currency strengthened in the global financial market
Nigeria’s foreign exchange reserves reached $41.046 billion on August 20, the highest level since December 2, 2021, according to the Central Bank of Nigeria’s (CBN) most recent data.
The country’s FX reserves had been steadily declining since the end of 2021 as the apex bank dipped into them to support the naira before it started an accretion on the back of various CBN reforms.
Last year, the total had dropped to almost $31 billion.
Investor confidence in the Nigerian economy has increased because of the various foreign exchange reforms, including initiatives to reduce the forex backlog
The CBN has begun the process of unifying exchange rates to reduce arbitrage opportunities and decrease market volatility. It introduced the Nigerian Foreign Exchange (FX) Code and cleared more than $7 billion of the verified backlog of forex forwards to ensure the market follows international best practices.
“We have done what we should do, which is act as a catalyst to ensure that this happens,” said CBN Governor Olayemi Cardoso at the latest Monetary Policy Committee meeting, confirming further reserve growth.
“It is also happening now. It is beginning to occur. I assure you that the statistics show that it is starting to happen,” the CBN chief added
U.S dollar attracts buying pressure ahead of Jerome Powell’s speech
Markets remained cautious ahead of Federal Reserve Chairman Jerome Powell’s speech, as traders scaled back their expectations for an impending interest rate cut. The US Dollar Index (DXY), which measures the value of the US dollar (USD) against a basket of six other major currencies, was flat on Friday morning during early Asian trading hours at 98.65.
Currency traders continued to reduce their bets on a rate cut ahead of Powell’s speech as the Federal Reserve chair later on Friday.
Investors are watching to see if the Fed chair will push back on current expectations for rate cuts, as Powell has used such opportunities to make market-moving policy announcements in recent years.
The central bank has left interest rates unchanged this year, citing increased uncertainty over tariffs. Powell and his colleagues face pressure from President Donald Trump, who has criticized the Fed and is calling for a drastic rate cut, with some members of the administration advocating for an unprecedented half-percentage-point cut next month.
According to Fed Chicago President Austan Goolsbee, he hopes that one “dangerous” data point is simply an anomaly, even though some recent inflation readings have been better than expected. Traders reduced their bets on rate cuts due to the strong factory purchasing managers index, despite data showing a rise in jobless claims, which also pointed to a slowing labor market.
Manufacturing growth was the fastest since 2022, based on one measure. A more hawkish stance from Fed officials and improved US economic data could support the DXY.
According to the CME FedWatch tool, markets now estimate about a 70 percent chance of a rate cut in September, down from 90 percent a week earlier.
The Fed’s annual Jackson Hole symposium will attract attention in hopes of revealing the policy outlook. Analysts expect Powell’s dovish shift to soon influence the US dollar. With a senior official, the Justice Department suggested potential plans to investigate Fed Governor Lisa Cook in the interim.
