Rates to drive foreign portfolio investments to $16.08bn
Foreign Portfolio Investments (FPIs) into Nigeria are projected to hit its highest on record in 2025 as the Central Bank of Nigeria (CBN) remains hawkish with its monetary stance to keep rates attractive to investors.
In the first half (H1) of 2025, FPI inflows reached $8.05 billion amid higher-for-longer monetary tightening. This is almost the entire inflow seen last year, which stood at $8.53 billion.
“At the current run rate, inflows could reach $16.08 billion by year-end, marking the highest on record,” analysts at CardinalStone Research said in their mid-year outlook entitled, ‘Charting the Sustainability Path.’
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“We see room for sustained FPI inflows, particularly as Nigeria prepares for a potential re-entry into the JP Morgan Bond Index, having been excluded for the past decade.”
Investor confidence in the economy continues to build momentum despite the recent global tensions that have sent portfolio investors seeking safe havens and bolting away from emerging markets like Nigeria.
The monetary authorities have held the key benchmark interest rate unchanged for two consecutive times this year after it aggressively raised it by a cumulative 875 basis points to 27.5 percent last year to anchor inflation and shore up the value of the naira.
Even though other central banks have begun an easing cycle, Nigeria’s Olayemi Cardoso-led CBN has kept rates high to lure in inflows — a move that has begun to pay off with record-high investments.
Analysts say the increase in portfolio inflows suggests Africa’s top oil producer may begin to see more foreign direct investments (FDI), many of which exited due to a liquidity crunch and inconsistent macroeconomic conditions.
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“Investors test the waters of an economy via portfolio investments because that’s short-term. When they see high yields and confidence in the economy, a situation we are witnessing now, they tend to commit for the long term, ushering capital for FDI,” a senior economist at Lagos-based research firm told BusinessDay.
More inflows mean stability of the naira and an overall improved economic condition. The naira was largely stable throughout the first half of 2025, staying within the bandwidth of 1,500 to 1,600 per dollar despite heightened external shocks and swings in global oil prices.
“The naira is likely to remain stable in the near term, supported by improving FX liquidity from domestic and foreign sources, alongside subdued demand pressures,” analysts at Cordros Research said in a note on Friday.
“Nonetheless, we highlight the possibility of gradual depreciation should global pressures reemerge.”
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