Nigeria’s foreign exchange inflow rose significantly by 31% month-on-month to $3.7 billion in May 2026, as improved domestic liquidity and stronger exporter proceeds boosted supply and supported the naira against major currencies.
Data from the FMDQ Exchange showed the increase marked a sharp rebound after two consecutive months of decline, despite global tensions from escalating Middle East conflicts.
However, on a year-on-year basis, forex inflows declined by 44%, reflecting lingering liquidity constraints and cautious foreign investor sentiment across emerging markets.
The report showed domestic inflows became the dominant source of forex supply in May, contributing about $2.1 billion compared with $1.2 billion in April.
Domestic sources accounted for around 56% of total inflows in May.
Proceeds from exporters remained the major driver of domestic forex liquidity, surging by 107% month-on-month to $1.4 billion, representing 68% of total domestic forex supply.
According to analysts at Quest Merchant Bank, the development was largely attributed to stronger oil export receipts, supported by elevated global crude prices amid supply disruptions from the Middle East conflict.
The Central Bank of Nigeria (CBN) also supported market liquidity through interventions, with total forex sales rising to about $125 million in May from $104 million in April.
Similarly, inflows from corporates and individuals increased to $520 million and $13.8 million respectively, compared with $415 million and $14.8 million in the previous month.
Naira Appreciation And External Reserves
Foreign inflows remained resilient despite global headwinds. Total foreign inflows rose slightly to $1.7 billion in May from $1.6 billion in April.
Foreign portfolio investments (FPIs) accounted for about 98% of foreign supply, with total inflows rising to $1.62 billion from $1.57 billion in April.
Further analysis showed fixed income instruments dominated FPI inflows, accounting for $1.55 billion during the review period.
Data released by the CBN showed the naira appreciated by 0.22% month-on-month at the official market to close May at ₦1,372 to the dollar.
At the parallel market, the naira also appreciated by 0.6% to close at ₦1,390 per dollar, narrowing the gap between official and unofficial rates.
Analysts at Quest Merchant Bank attributed the naira’s resilience to improved domestic forex supply and softer demand pressures, as global uncertainty disrupted supply chains and weakened import demand.
Nigeria’s gross external reserves rebounded to $49.6 billion in May after two consecutive months of decline.
The earlier depletion was due mainly to external debt service obligations, according to the CBN governor during the May Monetary Policy Committee meeting.
What Analysts Expect Next
The analysts expressed optimism that the naira would remain relatively stable over the near to medium term, supported by sustained domestic forex inflows and resilient offshore investments.
“Looking ahead, we expect the naira to remain resilient over the near to medium term, supported by adequate liquidity conditions driven by sustained domestic inflows and still robust offshore inflows.”
“In addition, we anticipate easing demand side pressures, as the ongoing conflict in the Middle East continues to suppress import activity,” the analysts noted.
Reduced import activities and cautious trade flows moderated forex demand from importers and corporates, easing pressure on the local currency.
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