Record $7.61bn FX spending raises fresh pressure on naira, household costs

Nigeria’s foreign exchange spending hit a record $7.61 billion in June 2026, exposing a growing source of dollar demand that could complicate efforts to sustain naira stability and contain the cost of living, as payments for financial and other services increasingly dominate the country’s foreign exchange needs.

Data from the Central Bank of Nigeria’s (CBN) second-quarter statistical bulletin show that June utilisation rose 78.1 per cent from $4.27 billion a year earlier and 36.1 per cent from $5.59 billion in May, marking the highest monthly level in the available series covering April 2022 to June 2026.

The striking feature is where the dollars went. Invisible transactions, which cover payments for services rather than physical goods, accounted for $5.63 billion, or about 74 per cent of June’s total, compared with $2.43 billion a year earlier. Financial services alone absorbed $3.50 billion, more than double the $1.68 billion recorded in June 2025.

By contrast, foreign exchange utilised for imports increased more modestly to $1.98 billion from $1.84 billion.

The pattern persisted across the second quarter. Nigeria’s total FX utilisation reached $18.34 billion, its highest quarterly level since the third quarter of 2011, with invisible transactions accounting for $13.24 billion, or 72.19 per cent of the total. Financial services consumed $9.64 billion, representing 52.58 per cent of overall utilisation.

This shift matters because pressure on the currency is no longer explained by the purchase of imported goods alone. Cross-border financial payments and business services are also absorbing substantial sums, competing for the dollars generated by exports, remittances and foreign investment.

For businesses, sustained demand for foreign currency can influence exchange-rate movements and the cost of settling international obligations. Import-dependent manufacturers and traders are especially exposed: a weaker naira raises the cost of machinery, raw materials, medicines and other inputs, which can eventually feed into prices paid by consumers.

Households may feel the consequences through more expensive imported goods, higher costs for services paid for in foreign currency and renewed pressure on food and transport prices if exchange-rate weakness increases businesses’ operating expenses. Even companies that do not directly purchase dollars can face higher costs when suppliers pass on currency-related increases.

The concern is reinforced by the scale of financial-services demand. The Financial Markets Dealers Association linked the rise to cross-border investment and payment flows, but its report did not provide a detailed breakdown of the transactions. The $9.64 billion quarterly figure therefore cannot automatically be treated as capital flight or investment repatriation.

Financial analyst Ayodeji Ebo, chief executive of MDU Capital, has similarly cautioned against interpreting short-term surges in dollar demand as proof that foreign investors are leaving Nigeria.

Commenting on recent currency-market pressure, he said demand could reflect large one-off transactions or import payments, while lower fixed-income yields might encourage some investors to take profits after earning interest and benefiting from naira appreciation.

Agusto & Co.’s Ayokunle Olubunmi and Centre for the Promotion of Private Enterprise chief executive Muda Yusuf also stressed the need for a longer run of data before concluding a reversal in portfolio flows.

There is also evidence that the higher utilisation has not, so far, translated into a deterioration in every measure of Nigeria’s external position. Total FX outflows fell 19.22 per cent to $8.93 billion in the second quarter, while net FX flows rose to $22.50 billion. Gross external reserves reached $55.16 billion as of October 22, providing a substantial buffer against external shocks. However, net FX flows should not be confused with additions to official reserves or with dollars immediately available in the market.

The challenge for policymakers is therefore to understand what is driving the expansion in financial and service-related payments, improve transparency around foreign-exchange transactions and sustain the inflows that support market liquidity.

For businesses and households, the critical outcome will be whether Nigeria can meet legitimate dollar demand without renewed currency instability feeding into prices.

The record utilisation figure is not, on its own, evidence of a foreign-exchange crisis. But it signals that as Nigeria’s dollar market expands, the composition of demand will be just as important as the volume of inflows in determining how much stability the economy can sustain.