FPI Inflows Soar 134% in June, Boosting Confidence in Nigeria’s FX Market

Nume Ekeghe

Foreign portfolio investors (FPIs) ramped up their participation in Nigeria’s foreign exchange market in June, with inflows jumping by 133.6 per cent month-on-month to $2.73 billion, the highest level in 29 months.

This surge reflects growing investor confidence in Nigeria’s reform drive, improved FX market transparency, and attractive yields on short-term instruments.

According to data from FMDQ, FPIs accounted for the bulk of foreign inflows, which made up 56.3 per cent of total FX receipts in June. The uptick helped offset weaknesses in other segments and reaffirmed Nigeria’s appeal to offshore investors amid easing global financial conditions and renewed local policy credibility.

Analysts at Cordros Securities expect the momentum from FPIs to persist in the near term, supported by elevated stop rates at OMO auctions and ongoing reforms by the Central Bank of Nigeria.

They reiterated that while inflows from foreign direct investors and corporates softened, the sharp rise in portfolio flows signals a return of foreign capital to Nigerian markets. Nonetheless, lingering global uncertainties and geopolitical risks could still pose headwinds to broader foreign exchange liquidity.

They stated: “According to the data from FMDQ, total inflows into the Nigerian Foreign Exchange Market (NFEM) declined by 28.1 per cent m/m to $4.84 billion in June from May $6.74 billion. The outturn was primarily due to a substantial decline in inflows from local sources, 43.7 per cent of total inflows. Specifically, inflows from local sources dipped to a four-month low, decreasing by 61.4 per cent m/m to $2.11 billion from $5.48 billion following declines in inflows across individuals, exporters/importers and non-bank corporates segments.

“On the other hand, inflows from foreign sources, 56.3 per cent of total inflows surged by 116.8 per cent m/m to $2.73 billion, May at $1.26 billion the highest level in twenty-nine months, supported by increased market confidence and the moderation in global pressures. As a result, the FPI +133.6 per cent m/m segment recorded higher accretion, while inflows from other corporates -39.8 per cent m/m and FDIs -31.6 per cent m/m segments declined.”

Looking ahead, analysts expect sustained momentum from FPIs in the near term, supported by relatively high interest rates, improved market transparency, and reduced currency volatility.

They further stated: “In the near term, we anticipate that foreign exchange inflows (particularly from FPIs) will continue to improve, supported by growing market confidence and elevated stop rates at OMO auctions. However, the lingering global trade uncertainties remain a downside risk to inflows from foreign counterparts, potentially constraining growth in the overall liquidity of the NFEM.”