Flows into FX market drop by 12.9% m/m to $4.12bn, says FMDQ

A report by FMDQ Exchange revealed that the total inflows into the Foreign Exchange Market declined by 12.9per cent month-on-month (m/m) to $4.12 billion in February 2025 from $4.74 billion reported in January 2025. 

According to the report, the decline in total inflows into the foreign exchange market was driven by a broad-based decline across foreign (50.1per cent of total transaction value) and local (49.9per cent of total transaction value) inflows.

Parsing through the breakdown, inflows from foreign sources declined by 10.5per cent m/m to $2.07 billion (January: $2.31 billion) reflecting declines in inflows from FPI (-12.5per cent m/m) and FDI (-12.3per cent m/m), amid a surge in other corporates inflows (+172.6per cent m/m).

“At the same time, inflows from local sources dipped by 15.1 per cent m/m to $2.06 billion (January: $2.43 billion) due to declines in inflows from individuals (-62.5 per cent m/m), CBN (-36.3 per cent) and exporters/importers (-22.5 per cent m/m), amid an increase in inflows from non-bank corporates (+3.5% m/m).

“However, the moderation in yields following the rebased inflation print (January 2025: 24.82 per cent y/y) is likely to dampen carry trade opportunities, restraining FX inflows from FPIs, ultimately affecting overall FX liquidity.”

Meanwhile, domestic and foreign portfolio Report of the Nigerian Exchange (NGX), total transactions in the local bourse declined by 9.9per cent m/m to N607.05 billion in January 2025 from N673.66 billion December 2024.   

The performance was primarily driven by the lower participation of the domestic investors (88.2 per cent of gross transactions).

Specifically, domestic investors’ inflows declined by 11.8 per cent m/m to N535.54 billion (December: N606.91 billion) due to a decline in transactions from institutional (-33.9 per cent m/m) amid an increase in transactions from retail investors (+33.1 per cent m/m).

On the other hand, inflows from foreign investors (11.8per cent of gross transactions) rose to the highest level since July 2024 (N57.52 billion), rising by 7.1per cent m/m to N71.51 billion in January (December: N66.75 billion), partly due to the improved market confidence following a more efficient FX market as well as moderating fixed income yields.