Nigeria’s foreign exchange market experienced a significant improvement in February as dollar inflows climbed to $4.37 billion, largely driven by fresh interventions from the Central Bank of Nigeria and increased investments from foreign portfolio investors.

Data released by FMDQ Securities Exchange showed that total inflows into the Nigerian Foreign Exchange Market rose by 45.4 per cent in February, increasing from $3.01 billion in January to the highest level recorded in about four months.

A substantial portion of the increase came from domestic sources. Local inflows accounted for about 52 per cent of the total, reaching $2.28 billion in February, compared to $1.23 billion in the previous month.

The rise was mainly linked to stronger interventions by the Central Bank, which significantly boosted dollar supply during the period to improve liquidity and support trading activities in the market. The apex bank has remained active in the forex market as part of efforts to stabilise the naira and rebuild confidence following recent currency reforms.

Apart from the CBN, other domestic contributors also increased their participation. Individuals supplied more foreign exchange, while exporters and importers brought additional dollars into the system. Non-bank companies also contributed, although their growth was more modest.

Foreign investors also raised their participation, though at a slower pace compared to local players. Inflows from international sources increased to $2.09 billion in February, up from $1.79 billion in January, representing about 48 per cent of the total inflows during the month.

The growth in foreign inflows was largely supported by foreign portfolio investors who invest in Nigerian equities and government debt instruments. Portfolio investments grew by around 22 per cent during the period.

Within this category, investment in Nigerian stocks recorded the strongest expansion, rising by more than 70 per cent, indicating renewed foreign interest in the country’s equity market. Investments in fixed-income instruments such as government bonds also increased by about 21 per cent, reflecting sustained demand for Nigeria’s high-yield debt securities.

However, not all forms of foreign investment recorded growth. Inflows from other foreign companies declined by about 25 per cent, while foreign direct investment (FDI) — typically associated with long-term projects like factories and infrastructure — fell by around 21 per cent.

This trend suggests that although short-term portfolio investments are rising, long-term foreign investments in Nigeria are still recovering gradually.

Analysts say the surge in dollar inflows reflects the impact of the central bank’s interventions and the gradual return of foreign investors, which are helping to improve liquidity in the foreign exchange market. However, they warn that global economic uncertainties could still influence investment flows into the country.

According to analysts at Cordros Capital, foreign inflows may remain moderate in the near term as global investors adopt a more cautious approach due to prevailing economic uncertainties.

For now, stronger dollar supply from the central bank alongside increased portfolio investments is helping to stabilise Nigeria’s foreign exchange market and improve the availability of dollars in the system.