Nigeria’s FX demand hits six-year high at $50.93bn

Nigeria’s foreign exchange utilisation surged 91.1 per cent to $50.93 billion in 2025, its highest annual level in six years, as demand for dollars by businesses, importers and service providers accelerated sharply despite efforts to stabilise the foreign exchange market.

The latest figure, contained in the Central Bank of Nigeria’s 2025 Statistical Bulletin, compares with $26.65 billion utilised in 2024 and represents the highest annual demand recorded since 2019.

The increase was driven largely by a sharp rise in payments for invisible transactions, which include financial, business and other services, alongside stronger demand for import-related foreign exchange.

CBN data showed that quarterly utilisation stood at $12.71 billion in Q1 2025, increased to $13.13 billion in Q2, eased to $12.01 billion in Q3 and rose again to $13.08 billion in Q4.

Of the full-year utilisation, $30.99 billion, or about 61 per cent, went to invisible transactions, while import-related transactions accounted for $19.94 billion.

The shift is significant because invisible transactions overtook merchandise imports as the dominant source of Nigeria’s formal FX demand.

Invisible transactions more than doubled from $11.11 billion in 2024 to $30.99 billion, while import-related utilisation increased from $15.54 billion to $19.94 billion.

Financial services accounted for the largest share of invisible transactions, rising from $10.76 billion in 2024 to $20.30 billion in 2025.

Business services recorded an even sharper increase, climbing from about $702 million to $5.45 billion, while other services not elsewhere classified rose from about $22 million to $3.51 billion.

The figures suggest that Nigeria’s foreign exchange pressure extends well beyond the importation of physical goods, with businesses increasingly requiring dollars for financial, professional and other cross-border services.

Within merchandise-related demand, the industrial sector remained the largest user of import FX, accounting for $8.60 billion, compared with $6.96 billion in 2024.

Manufactured products followed with $2.69 billion, while food products accounted for $2.36 billion.

The oil sector’s FX utilisation also more than doubled to $4.73 billion from $2.26 billion, while transport-sector demand increased to $677.51 million from $458.58 million.

Agricultural-sector utilisation rose to $208.87 million, compared with $155.96 million a year earlier.

The increase in demand occurred against a broader expansion in Nigeria’s foreign exchange flows.

Aggregate FX inflows rose 13.81 per cent to $109.86 billion in 2025, from $96.53 billion in 2024, while total outflows increased 27.83 per cent to $49.05 billion.

That produced a reported net FX inflow of $60.81 billion, compared with $58.16 billion in the previous year.

The latest utilisation figures therefore need to be viewed alongside the improvement in the supply side of the market. Nigeria’s external reserves have strengthened considerably in 2026, reaching $54.08 billion by September 3, the highest level since December 2008.

The naira has also appreciated significantly this year, trading at N1,320.56/$ on September 7 and N1,320.25/$ on September 8, reflecting substantially improved market conditions compared with the severe dollar shortages that characterised earlier periods.

The contrast is important for policymakers. The 2025 data shows that demand for foreign currency remained exceptionally strong, but the 2026 reserve accumulation and firmer naira suggest that the capacity to meet that demand has improved.

For businesses, the structure of the 2025 demand also matters. The dominance of invisible transactions means that reducing Nigeria’s FX vulnerability will require more than lowering import dependence. Greater domestic capacity in financial, professional, digital and other services could also reduce the amount of foreign currency leaving the country.

The data also underscores the importance of maintaining stable oil production, attracting capital inflows and expanding non-oil sources of foreign exchange.

Nigeria’s foreign exchange challenge is therefore becoming more complex. The $50.93 billion utilisation figure confirms that dollar demand remains substantial, but its composition shows that the pressure is increasingly coming from services as well as goods.

The policy challenge is no longer simply to supply enough dollars to the market. It is to build an economy that earns more foreign exchange, substitutes efficiently for imported goods and services, and reduces the structural demand for scarce dollars.