The Central Bank of Nigeria (CBN) has reported a significant increase in foreign portfolio investment inflows, reaching $6.3bn between January and August 2026. This development has strengthened Nigeria's foreign exchange position, reducing pressure on the CBN's direct intervention in the foreign exchange market. According to Deputy Governor of the CBN, Muhammad Sani Abdullahi, the increase in foreign exchange supply has contributed to greater stability in the market.
The CBN's Deputy Governor made this disclosure at the 38th Seminar for Finance Correspondents and Business Editors in Abuja. Abdullahi attributed the bulk of the foreign exchange inflows to autonomous sources, which accounted for nearly 68 per cent of the $10.8bn in total flows recorded in July 2026. This represents a significant shift towards private sector-driven foreign exchange inflows.
Diaspora remittances have also remained a crucial source of foreign exchange for Nigeria. In July 2026, inflows through international money transfer operators reached about $950m. The continued flow of remittances through formal channels provides another source of dollar liquidity for the economy, complementing foreign portfolio investments and autonomous foreign exchange inflows.
The improvement in foreign exchange supply has coincided with a significant increase in Nigeria's external reserves. As of September 11, 2026, the country's gross external reserves stood at $55.6bn. This development has provided Nigeria with a larger external liquidity buffer, increasing its capacity to manage periods of pressure in the foreign exchange market.
The CBN has also reported an improvement in Nigeria's net reserves, which had stood below $900m in 2023 after accounting for identified short-term obligations. The stronger reserve position has enabled the country to better manage its foreign exchange obligations. Additionally, the gap between the official and parallel market exchange rates has narrowed significantly.
The average gap between the official and parallel market exchange rates has narrowed to below 2.2 per cent, compared with an average of 68.2 per cent between January and May 2023. This development indicates that rates in the two market segments have moved significantly closer together since the reforms introduced by the apex bank.
The CBN has attributed the greater stability in the foreign exchange market to tighter monetary policy and improved liquidity management. However, the bank has cautioned that sustaining the gains recorded so far will require continued policy discipline and efforts to deepen the sources of investment and foreign exchange supply.
Key points
- The CBN has recorded $6.3bn in foreign portfolio investment inflows between January and August 2026.
- Autonomous sources accounted for nearly 68 per cent of the $10.8bn in total flows recorded in July 2026.
- Nigeria's gross external reserves stood at $55.6bn as of September 11, 2026.
