NIGERIA’S foreign exchange utilisation surged by 74 percent year-on-year to $16.2 billion in the first quarter of 2026, reflecting improved liquidity, greater stability in the naira and renewed confidence in the official foreign exchange market. The latest data contained in the Central Bank of Nigeria’s (CBN) Quarterly Statistical Bulletin showed that the increase was driven […] The post Forex utilisation rises by 74 percent to $16.2bn as naira confidence strengthens appeared first on Tribune On
NIGERIA’S foreign exchange utilisation surged by 74 percent year-on-year to $16.2 billion in the first quarter of 2026, reflecting improved liquidity, greater stability in the naira and renewed confidence in the official foreign exchange market.
The latest data contained in the Central Bank of Nigeria’s (CBN) Quarterly Statistical Bulletin showed that the increase was driven largely by invisible transactions, whose utilisation more than doubled to $11.4 billion from $4.5 billion recorded in the corresponding period of 2025.
Invisible transactions accounted for about 70 percent of total foreign exchange utilisation during the period, underscoring their growing importance in Nigeria’s overall FX demand.
Financial services emerged as the dominant user within the invisible transactions segment, with utilisation rising by 117 percent year-on-year to $9 billion.
The sector alone accounted for about 79 percent of total invisible transactions, highlighting the significant role of financial institutions in driving demand for foreign exchange.
Business services also recorded a substantial increase, with FX utilisation rising to $1.2 billion from $223.6 million a year earlier.
In contrast, utilisation for merchandise imports remained relatively stable at $4.9 billion, representing a marginal 0.2 percent increase from the previous year.
However, foreign exchange utilisation by industrial firms declined by 20 percent year-on-year to $1.8 billion. The sector is heavily dependent on imported raw materials, machinery and equipment.
Meanwhile, utilisation for manufactured products increased sharply to $1.1 billion from $477.9 million, while transport products rose to $295 million from $142.8 million.
Analysts attributed part of the increase in these categories to higher import costs arising from global supply-chain disruptions and elevated prices of critical inputs and raw materials.
The broad increase in FX utilisation came amid a stronger position in Nigeria’s external reserves and improved stability in the naira, developments that have helped to restore confidence in the foreign exchange market.
The naira has strengthened to around N1,339 per dollar in the official market, compared with about N1,431/$ at the beginning of the year.
At N1,338.59/$, the currency has appreciated by roughly 6.5 percent since the first trading day of 2026.
The improvement means that N1 million, which was equivalent to about $699 at the January rate, is now worth roughly $747 at the prevailing official rate, increasing the dollar purchasing power of the same naira amount.
The stronger exchange rate has implications for businesses importing machinery, software and other dollar-priced inputs, as well as Nigerians paying foreign education and travel expenses and companies servicing FX-linked obligations.
However, analysts cautioned that a stronger naira does not automatically translate into lower domestic living costs, as food, rent, electricity, transportation and other prices remain influenced by energy costs, wages, logistics, taxes, supply constraints and accumulated inflation.
The improvement in the FX market has also been reflected in increased trading activity. Turnover on the Nigerian Foreign Exchange Market (NFEM) reached about $914 million on Wednesday, indicating stronger participation and liquidity.
The gap between the official and parallel-market exchange rates has also narrowed to about 4.4 percent, reducing the incentive for arbitrage and improving the credibility of price discovery.
Nigeria’s gross external reserves have risen to about $53.29 billion, representing an increase of roughly 29 percent from a year earlier, providing additional support for confidence in the currency and the FX market.
Quest Merchant Bank analysts said they expected FX utilisation across sectors to strengthen further, supported by ongoing CBN reforms and measures aimed at sustaining foreign exchange supply, deepening market liquidity and preserving confidence in the naira.
The developments also come as Nigeria seeks to strengthen its position with international investors following its return to the FTSE Russell Frontier Market classification.
For foreign investors, the ability to convert naira into foreign currency and repatriate investment proceeds is a critical consideration in assessing the Nigerian market.
The improvement in liquidity and narrowing of the exchange-rate gap therefore represent more than a stronger naira, as they point to gradual rebuilding of confidence in the functioning of Nigeria’s foreign exchange market.
Analysts, however, said the sustainability of the gains would depend on continued dollar supply, stronger external buffers and the consistency of CBN reforms.
The longer-term objective, they noted, is not simply to achieve a particular naira-dollar exchange rate, but to build a liquid, predictable and transparent FX market that businesses and investors can rely on.
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