Nigeria’s Foreign Exchange Utilisation Hits Record Level
Nigeria’s total sectoral foreign exchange utilisation rose to a record $34.59 billion in the first half of 2026 as demand increased sharply across major service sectors.
The figure represents a 61.9 per cent increase from the $21.37 billion recorded during the corresponding period of 2025.
The data showed that foreign exchange utilisation reached its highest level in records covering the period from 2010 to 2026.
The sharp increase highlights growing activity across Nigeria’s foreign exchange market.
However, the rise was driven largely by spending on invisible imports rather than traditional imports of physical goods.
Invisible Imports Drive Foreign Exchange Demand
Invisible import utilisation accounted for 71.2 per cent of total foreign exchange utilisation during the first six months of the year.
Spending in this category surged by 117.2 per cent to $24.63 billion.
This compares with $11.34 billion recorded in the first half of 2025.
Invisible imports generally include spending on services rather than physical goods.
The sharp increase was driven mainly by the financial services sector.
Foreign exchange utilisation in financial services rose by 97 per cent to $19.16 billion.
The business services category recorded an even stronger increase.
Utilisation in the sector surged by 263.7 per cent to $2.89 billion.
Visible Import Demand Declines
Unlike service-related foreign exchange demand, visible import utilisation declined slightly.
Utilisation for physical imports fell by 0.7 per cent to $9.96 billion.
The figure compares with $10.03 billion recorded in the first half of 2025.
The decline was largely driven by lower utilisation in the industrial and oil sectors.
Foreign exchange use in the industrial sector declined by 21.2 per cent to $3.72 billion.
Utilisation in the oil sector also fell by 18.7 per cent to $2.15 billion.
The reduction could reflect changes in Nigeria’s domestic production and import structure.
Domestic Refining Could Reduce Petroleum Imports
One of the major developments expected to influence Nigeria’s foreign exchange demand is the expansion of domestic refining.
Increased local production of refined petroleum products could reduce the country’s dependence on imported fuel.
Lower petroleum imports could reduce pressure on foreign exchange reserves.
This could also change the composition of Nigeria’s import demand.
As physical import utilisation declines, services are becoming increasingly important drivers of foreign exchange demand.
The growing use of foreign exchange for financial and business services reflects the increasing complexity of Nigeria’s economy.
CBN Measures Support FX Market Liquidity
The Central Bank of Nigeria is expected to continue implementing measures aimed at supporting liquidity in the foreign exchange market.
Improving macroeconomic conditions could also provide additional support.
Stable foreign exchange conditions are important for businesses, investors and consumers.
Exchange-rate uncertainty can increase the cost of doing business.
It can also affect investment decisions and the pricing of imported goods.
The sharp increase in utilisation suggests improved access to foreign exchange across several sectors.
Naira Strengthens as Reserves Rise
The foreign exchange market also recorded positive developments during the latest trading week.
The naira appreciated by 0.7 per cent week-on-week to N1,338.01 against the United States dollar.
The improvement was supported by offshore supply linked to participation in the week’s Open Market Operations auction.
Nigeria’s gross external reserves also increased by $478.45 million.
Reserves rose to $53.31 billion as of August 27, 2026.
The improvement in reserves could provide additional support for the foreign exchange market.
Outlook Remains Broadly Stable
The naira is expected to trade within a broadly stable range in the near term.
The outlook is being supported by portfolio inflows and improving investor sentiment.
A widening current account surplus could also support foreign exchange conditions.
However, risks remain.
A renewed decline in oil-related foreign exchange inflows could put pressure on the market.
Oil remains an important source of foreign currency earnings for Nigeria.
Any significant reduction in oil receipts could weaken the country’s foreign exchange position.
Record Utilisation Reflects Changing Economy
The record $34.59 billion in foreign exchange utilisation reflects changing patterns in Nigeria’s economy.
The growing importance of financial and business services suggests that foreign exchange demand is no longer driven mainly by physical imports.
At the same time, domestic refining and local production could reduce demand for some imported goods.
The challenge for policymakers will be ensuring that the supply of foreign exchange keeps pace with growing economic activity.
For businesses, improved access to foreign exchange could support trade and expansion.
For the wider economy, stable liquidity will remain essential to maintaining confidence in the naira and supporting long-term growth.
