The Nigerian Naira exhibited notable stability against the US Dollar in recent trading, finding solid support from a significant rebound in foreign exchange supply orchestrated by the Central Bank of Nigeria (CBN).
CBN Intervention Fuels Market Liquidity
Data from the FMDQ Securities Exchange reveals a dramatic 38% month-on-month increase in total FX inflows, which climbed to $2.8 billion in December 2025. This recovery is largely credited to aggressive intervention by the apex bank. The CBN's direct dollar sales to the market surged to $654 million in December, more than doubling the $318 million sold in November 2025.
This injection of liquidity provided a crucial buffer, helping the Naira trade within a tight band. At the Nigerian Autonomous Foreign Exchange Market (NAFEM), the local currency experienced only a marginal depreciation of 0.1% on Thursday, January 8, with the dollar quoted at N1,419.71, compared to N1,418.26 the previous day. In the parallel market, the exchange rate remained completely unchanged at N1,490 per dollar.
Breaking Down the Inflow Components
The December rebound followed a severe 67% contraction in November, though inflows remain fragile, marking the second-weakest level in 16 months. A breakdown shows improvements across most supply sources:
- Foreign Portfolio Investments (FPI) saw a modest 7% rise to $632 million, a sharp slowdown from October's $3.5 billion as offshore investors engaged in year-end profit-taking.
- Foreign Direct Investment (FDI) witnessed a remarkable surge, more than quadrupling to $50.1 million.
- Inflows from exporters, importers, and individuals also rose sharply.
- The only segment that declined was domestic corporate inflows, which fell by 5% to $420 million.
Concurrently, Nigeria's external reserves saw a slight uptick, rising to $45.64 billion as of January 7, 2026, from $45.62 billion the day before, bolstering the CBN's firepower for future market support.
Positive Outlook and Remittance Surge
Financial analysts at FBNQuest Capital project a strengthening of investor activity in the coming months. They cite attractive domestic carry trade opportunities as a key driver. Furthermore, expectations of softer inflation in Nigeria and a potentially more dovish monetary policy stance by the US Federal Reserve in 2026 could improve global risk appetite and channel stronger capital inflows into the Nigerian economy.
In a related positive development, CBN Governor Olayemi Cardoso announced a significant leap in diaspora remittances. He reported that inflows from Nigerians abroad have jumped from about $200 million to $600 million within a two-month period. Speaking at an investment roundtable in São Paulo, Brazil, Cardoso projected that these remittance flows could reach at least $1 billion by the end of the year, providing another substantial source of foreign exchange for the nation.
The combined effect of strategic CBN intervention and improving autonomous inflows is creating a more favourable environment for the Naira, offering hope for sustained stability in the foreign exchange market as Nigeria moves deeper into 2026.
