Nigeria's Foreign Exchange Market Faces Volatility Despite Rising Corporate Inflows

Despite rising corporate inflows in Nigeria's foreign exchange (FX) market in July, the market continues to face volatility. Corporates invested $2.025 billion in the market, up from $800 million in June, indicating increased confidence in the official FX window.

Foreign Portfolio Investments (FPIs) remain the largest source of supply, contributing 45% of overall inflow. The Central Bank of Nigeria (CBN) increased its market presence by selling $326 million in July to stabilize the naira.

However, the currency still ended the month weaker due to ongoing dollar demand. Analysts suggest that unless significant changes are made to the FX market structure to diversify sources of capital, volatility will persist.

While the increase in corporate inflows provides temporary relief, the currency remains under pressure from reliance on FPIs. The article also mentions a Memorandum of Understanding signed by the Nigerian government to train individuals in foreign exchange trading as a measure to tackle unemployment and promote financial inclusion.