Nigeria's Q1 foreign exchange utilization jumps 74% to $16.2 billion

This surge, detailed in the Central Bank of Nigeria’s Quarterly Statistical Bulletin, was primarily driven by invisible transactions, which more than doubled to $11.4 billion and accounted for approximately 70% of the total FX utilization. The financial services industry led this growth within invisible transactions, with its FX utilization climbing 117% to $9 billion. Business services also saw a substantial increase to $1.2 billion.

While spending on merchandise imports remained largely stable at $4.9 billion, industrial companies experienced a 20% drop in FX demand to $1.8 billion. Conversely, FX utilization for manufactured products and transport products rose. This overall increase is attributed to improved dollar supply, greater currency stability, and enhanced liquidity in Nigeria's FX market, supported by stronger gross external reserves.

Lagos-based emerging markets analyst, Ike Ibeabuchi, noted that this indicates businesses are returning to the formal foreign exchange market, though he emphasized that the trend's sustainability depends on the CBN maintaining adequate dollar supply and ensuring exchange-rate stability through robust economic activity.