Nigeria recorded a decrease in net foreign exchange inflows in January 2025, largely due to a reduction in contributions from the Central Bank of Nigeria (CBN), according to the CBN’s latest Economic Report released on 17 April.
Net foreign exchange inflows totalled $4.79 billion in January, representing a 4.49% decline from the $5.01 billion recorded in December 2024.
The report highlighted significant shifts in both inflow and outflow figures. Aggregate foreign exchange inflows dropped to $9.63 billion in January 2025, compared to $10.17 billion in the preceding month. Likewise, foreign exchange outflows fell to $4.84 billion, down from $5.17 billion in December.
Breakdown of Foreign Exchange Components
Foreign exchange inflows through the CBN saw a sharp decline, falling to $2.33 billion from $4.09 billion in December 2024. In contrast, autonomous foreign exchange inflows increased to $7.31 billion, up from $6.08 billion recorded the previous month.
On the outflow side, CBN-mediated outflows declined to $3.80 billion from $4.16 billion, while autonomous outflows experienced a marginal rise to $1.04 billion, up from $1.01 billion in December.
This shift resulted in a net outflow of $1.47 billion through the apex bank during the review period, a stark contrast to the net outflow of just $0.07 billion in December 2024. Conversely, autonomous sources registered a net inflow of $6.26 billion, significantly higher than the $5.07 billion noted a month earlier.
Exchange Rate Movements
The report also noted a modest strengthening of the naira against the US dollar on the Nigerian Foreign Exchange Market (NFEM).
During the review period, the average exchange rate appreciated by 1.16% to N1,535.94/USD, up from N1,553.73/USD in December 2024. Furthermore, the end-period NFEM rate improved by 3.90%, reaching N1,478.22/USD compared to N1,535.82/USD at the end of December.
Activity in the foreign exchange market also rose notably, with average turnover increasing by 18.30% to $408.49 million, up from $345.30 million in December. This reflects a rise in transaction volumes and improved liquidity in the NFEM.
What You Should Know
The decline in CBN-facilitated foreign exchange inflows may present challenges for Nigeria’s balance of payments and foreign reserves, which traditionally rely on government channel contributions.
However, the continued growth of autonomous inflows highlights increasing engagement by private and external actors, providing a partial buffer against the effects of reduced CBN activity.
Meanwhile, the naira’s appreciation during January offers a more optimistic outlook, potentially easing import costs and bolstering consumer purchasing power.
Still, fluctuations in aggregate foreign exchange volumes underscore the need for structural reforms and consistent policy responses to ensure macroeconomic stability.