Nigeria’s foreign exchange market experienced a major slowdown in April 2026 as total inflows into the Nigerian Foreign Exchange Market (NFEM) dropped significantly due to rising global tensions and weaker investor confidence.
According to data released by the FMDQ Securities Exchange, total foreign exchange inflows fell by 30.1 percent in April, dropping from $4.09 billion recorded in March to $2.86 billion. The decline reflected growing uncertainty in the global economy, especially concerns linked to the Middle East crisis and the ongoing tensions between the United States and Iran.
The report showed that both local and foreign investors reduced their participation in the market during the period.
Domestic inflows accounted for 42.8 percent of the total market inflows but fell sharply by 38.7 percent. Local inflows declined from $2 billion in March to $1.22 billion in April.
One of the biggest drops came from the Central Bank of Nigeria (CBN), whose interventions in the forex market decreased by 83 percent compared to the previous month. Other local contributors also recorded declines. Inflows from exporters and importers dropped by 19.3 percent, while non-bank corporates recorded an 18.2 percent decline. Individual inflows also reduced by 33.3 percent.
Foreign inflows, which made up 57.2 percent of total inflows, were not spared either. They dropped by 21.9 percent from $2.09 billion in March to $1.63 billion in April.
Further analysis showed that foreign portfolio investment (FPI) inflows declined by 17.8 percent. Foreign direct investment (FDI) suffered the most severe drop, plunging by 78.9 percent. Inflows from other foreign corporates also decreased by 54.6 percent.
Financial analysts at Cordros Research explained that the sharp decline highlights the effect of geopolitical uncertainty on emerging markets like Nigeria. According to them, investors are becoming more cautious due to increasing global risks, leading to slower capital movement into developing economies.
Despite the reduced inflows, the naira managed to post a slight gain against the United States dollar during the week. The local currency appreciated by 1.2 percent to close at N1,360 per dollar, largely supported by offshore investor activity that helped reduce pressure in the market.
However, at the official foreign exchange market, the naira weakened slightly by 0.22 percent to close at N1,361.40 per dollar. At the parallel market, the currency improved by 44 basis points to settle at N1,363.15 per dollar.
The forwards market also recorded positive performance as the naira strengthened across different contract periods. The one-month forward contract appreciated by 1.2 percent to N1,384.53 per dollar, while the three-month contract gained 1.2 percent to N1,424.08. The six-month contract rose by 1.3 percent to N1,478.39, and the one-year contract strengthened by 1.5 percent to N1,586.56 per dollar.
Meanwhile, Nigeria’s external reserves continued to decline. The country’s gross reserves fell by $40 million to $48.33 billion as of May 7, 2026. This marked the eighth straight week of decline, mainly due to continued CBN interventions, debt repayments, weak oil earnings, and foreign capital outflows.
On the global oil market, crude prices increased as tensions between the United States and Iran raised fears of supply disruptions in the Strait of Hormuz. Brent crude rose to $101.30 per barrel, while West Texas Intermediate climbed to $95.28 per barrel. However, Nigeria’s Bonny Light crude recorded a decline.
Analysts at Cowry Assets Management believe the naira may remain relatively stable in the short term due to attractive investment yields and continued foreign portfolio interest. However, they warned that worsening geopolitical tensions and pressure in the forex market could force the CBN to resume stronger interventions to stabilize the currency.
They added that improved oil revenues and stronger foreign capital inflows would be necessary for Nigeria to rebuild its reserves and maintain exchange rate stability in the coming months.
