Nigeria’s foreign exchange utilisation rose to $18.34 billion in the second quarter of 2026 with financial services accounting for more than half of total demand.
The increase comes as the Central Bank of Nigeria (CBN) reduces its direct dollar sales, leaving autonomous foreign exchange inflows to play a greater role in meeting demand from banks, businesses and other market participants.
According to foreign exchange market data compiled from CBN records, total utilisation increased by 12.84% from $16.25 billion in the first quarter and 52.42% from $12.03 billion in the corresponding period of 2025.
At $18.34 billion, quarterly utilisation reached its highest reported level since the third quarter of 2011.
Financial services accounted for $9.64 billion, representing approximately 52.6% of total foreign exchange utilisation during the quarter.
This was substantially higher than the $5.58 billion recorded in the corresponding period of 2025, demonstrating the expanding role of financial transactions in Nigeria’s foreign currency market.
For the economy, the composition of dollar demand is becoming increasingly important.
Foreign exchange requirements are no longer determined principally by merchandise imports. Financial transactions, international service payments and other invisible obligations now account for a substantial proportion of the dollars utilised.
This means exchange rate stability depends not only on the country’s ability to finance imports but also on the availability of foreign currency for international financial transactions.
However, the financial services category does not establish how much of the money was used for investment repatriation, debt payments or other specific transactions.
The increase should therefore not be interpreted automatically as capital flight.
Total invisible transactions reached $13.24 billion, accounting for approximately 72.2% of foreign exchange utilisation.
The figure nearly doubled from $6.85 billion in the second quarter of 2025, indicating that service-related and financial transactions are becoming increasingly significant sources of foreign currency demand.
By comparison, merchandise imports accounted for $5.10 billion, representing approximately 27.8% of total utilisation.
The difference illustrates the changing structure of Nigeria’s foreign exchange requirements.
For manufacturers and import-dependent businesses, the implications are significant because competition for dollar liquidity extends beyond companies purchasing machinery, raw materials and finished goods.
Financial institutions and businesses settling international obligations also require access to the same foreign exchange market.
Where demand grows faster than available supply, companies may face higher exchange rates or more expensive currency hedging arrangements, potentially increasing production and operating costs.
The second-quarter figures, however, do not establish that such pressures occurred during the period. That assessment requires corresponding exchange rate and market liquidity data.
The supply side presents a contrasting development.
Autonomous foreign exchange inflows reached $23.31 billion in the second quarter, accounting for approximately 74.2% of total inflows.
These funds, generated through sources outside direct CBN market sales, are increasingly important to the functioning of Nigeria’s foreign exchange market.
Total inflows stood at $31.43 billion during the quarter, compared with $32.39 billion in the preceding three months.
CBN-sourced inflows declined to $8.12 billion, while direct dollar sales by the central bank fell sharply to $418.08 million from approximately $1.26 billion in the first quarter.
The reduction was even more pronounced compared with the second quarter of 2025, when the CBN sold approximately $3.17 billion.
This indicates that higher foreign exchange utilisation coincided with substantially lower direct dollar sales by the monetary authority.
The development is important because it suggests that non-CBN market participants are assuming a larger role in supplying foreign currency.
A market supported by stronger autonomous inflows could reduce the need for repeated central bank intervention and help establish more sustainable price discovery.
Nevertheless, reduced intervention is not sufficient evidence of lasting market stability.
The durability of the improvement depends on whether foreign exchange inflows remain strong enough to meet demand during periods of market volatility or weaker investor confidence.
Nigeria recorded total foreign exchange outflows of $8.93 billion during the quarter, leaving net flows of approximately $22.50 billion.
Although the positive net position indicates that recorded inflows exceeded outflows, it should not be treated as an equivalent increase in Nigeria’s external reserves.
The measures represent different aspects of foreign exchange activity and cannot be used interchangeably.
For banks, a more liquid foreign exchange market could improve their ability to facilitate international payments, settle customer obligations and provide trade finance.
For manufacturers and other businesses, the benefit would be greater predictability in accessing foreign currency for legitimate transactions.
The central question is whether Nigeria can sustain higher levels of dollar utilisation without returning to heavy reliance on CBN intervention.
With financial services accounting for more than half of demand and autonomous inflows providing nearly three-quarters of supply, the second-quarter data suggests that Nigeria’s foreign exchange market is undergoing a significant structural adjustment.
The sustainability of that adjustment will depend on continued foreign currency inflows, confidence in the naira and the capacity of the market to accommodate financial transactions alongside the needs of the productive economy.
