CBN’s dollar sales slide to 5yr-low as private inflows grease FX market

Nigeria’s foreign exchange market is showing signs of a changing structure, as the Central Bank of Nigeria (CBN) significantly reduces its direct dollar sales while private-sector inflows increasingly provide foreign currency to the economy.

According to figures from the CBN’s statistical bulletin reported by BusinessDay on October 30, 2026, the apex bank’s recorded foreign exchange sales fell to $1.67 billion in the first half of 2026, compared with $5.41 billion in the corresponding period of 2025.

This represents a decline of approximately 69 per cent and the lowest first-half figure in the five-year period examined.

Private-sector inflows take centre stage

The decline in CBN dollar sales comes amid an increase in foreign exchange inflows from private and other autonomous sources.

Total foreign exchange inflows rose by 12.7 per cent to $63.82 billion in H1 2026, up from $56.62 billion in the same period of 2025.

Autonomous sources accounted for $45.5 billion of the total, compared with $38.3 billion a year earlier. These sources include private-sector transactions, exporters, investors and other non-CBN channels.

Why is the CBN selling fewer dollars?

Analysts attribute the development to several factors:

Improved investor confidence: Foreign investors are increasingly bringing dollars into Nigeria.

Attractive naira yields: Higher returns on naira-denominated investments have encouraged foreign portfolio investors.

FX market reforms: The foreign exchange reforms introduced in June 2023 have encouraged greater participation in the formal market.

Improved dollar supply: Private-sector inflows are increasingly meeting foreign exchange demand, reducing the need for constant CBN intervention.

Is this good news for Nigeria?

The development is broadly positive for the Nigerian economy.

When the CBN does not have to sell large amounts of its foreign exchange reserves to support the market, it can conserve those resources for other external obligations and periods of pressure.

It could also help stabilise the naira, improve access to foreign exchange and give businesses greater certainty when planning imports.

However, there are risks. A significant portion of the inflows comes from portfolio investments, which can leave the country quickly if investors lose confidence or find more attractive opportunities elsewhere.

Nigeria therefore needs more foreign direct investment, stronger non-oil exports, oil earnings and diaspora remittances to sustain the improvement.

The bigger picture

The important question is whether Nigeria is building a foreign exchange market capable of attracting and retaining dollars without depending heavily on the CBN.

My assessment: This is an encouraging development and potentially an indication that the FX reforms are gaining traction. However, lower CBN dollar sales alone do not prove that Nigeria has solved its foreign exchange problems. The real test is whether the naira can remain stable even when foreign portfolio investors withdraw their funds. (BusinessDay)