Naira Stability Fuels End-User Forex Demand as Q1 Utilisation Hits $16.2bn

Nigeria's foreign exchange utilisation rose 74% year-on-year to $16.2bn in Q1 2026, driven by improved naira stability and market predictability, analysts at Quest Merchant Bank have said.

The analysts stated this in a report on the Central Bank of Nigeria's Q1 2026 forex utilisation data.

Invisible Transactions Lead the Surge

The report said invisible transactions more than doubled to $11.4bn from $4.5bn a year earlier, accounting for 70% of total forex utilisation.

Financial services remained the largest user, with utilisation up 117% YoY to $9.0bn. The sector accounted for 79% of total invisible transactions.

Business services, the second-largest category within invisible transactions, rose sharply to $1.2bn from $223.6m.

Visible Imports Mixed

For visible imports, merchandise imports stayed broadly stable, rising 0.2% YoY to $4.9bn.

Industrial firms saw utilisation drop 20% YoY to $1.8bn. In contrast, manufactured products rose to $1.1bn from $477.9m, while transport products increased to $295.0m from $142.8m.

The report attributed the increase partly to higher import costs arising from disruptions to global supply chains and elevated prices of critical inputs and raw materials following the US-Iran conflict.

Outlook and Reforms

Quest Merchant Bank analysts said the rise in sectoral forex utilisation reflects improved FX liquidity in the economy, supported by the stronger position of Nigeria's gross external reserves.

They also noted that sustained forex availability is evident in the relative stability of the naira, which has enhanced market confidence and encouraged greater FX demand from end-users by improving predictability in the FX market.

“We anticipate stronger FX utilisation across sectors, supported by the CBN's ongoing reforms and policy measures aimed at sustaining FX supply, deepening market liquidity and preserving confidence in the naira,” the analysts said.

For Nigerian businesses, the data points to improved forex access, though import-dependent sectors still face cost pressures from global supply chain disruptions.