Nigeria’s foreign exchange utilisation surged by $13.22 billion to a record $34.59 billion in the first half of 2026, up 61.9 percent from $21.37 billion recorded in the same period of 2025.
The $13.22 billion year-on-year increase pushed utilisation to its highest first-half level in the available Central Bank of Nigeria data series dating back to 2010.
However, the surge was not driven by a corresponding increase in foreign currency used to import physical goods.
Instead, financial and business services accounted for most of the additional demand, highlighting a major change in the composition of foreign exchange utilisation in Nigeria.
Invisible transactions, which cover foreign currency payments for services and other transactions that do not involve the physical importation of goods, climbed 117.2 percent to $24.63 billion.
That represented 71.2 percent of all foreign exchange utilised during the six-month period.
A year earlier, invisible transactions stood at $11.34 billion.
Financial services were responsible for most of the increase, with FX utilisation in the sector almost doubling to $19.16 billion from $9.72 billion in the first half of 2025.
The sector alone accounted for more than half of all foreign exchange utilised across the Nigerian economy during the period.
Business services recorded an even faster rate of expansion.
Foreign currency utilisation in the category increased 263.7 percent to $2.89 billion from $749 million a year earlier.
The sharp increase in service-related transactions contrasted with demand for dollars used to bring physical goods into Nigeria.
Visible import utilisation declined 0.7 percent to $9.96 billion in the first half of 2026 from $10.03 billion in the same period last year.
That means Nigeria processed more than $13 billion of additional foreign exchange transactions year-on-year even though the amount used for merchandise imports was slightly lower.
Industrial companies were among the sectors recording the largest reductions.
FX utilisation by the industrial sector fell 21.2 percent to $3.72 billion from $4.72 billion a year earlier.
The decline is significant because manufacturers and other industrial businesses depend on foreign currency to purchase machinery, equipment, raw materials and other inputs that may not be available locally.
Foreign exchange utilisation by the oil sector also declined, falling 18.7 percent to $2.15 billion from $2.64 billion in the first half of 2025.
Lower oil-related utilisation comes as Nigeria’s domestic refining industry expands and the country reduces its historical dependence on imported refined petroleum products.
The Dangote refinery has become particularly important to that transition, replacing significant volumes of imported fuel while simultaneously expanding Nigeria’s petroleum-product exports.
The broader FX figures indicate that the Nigerian market is now handling considerably larger transaction volumes without experiencing the severe dollar shortages and repatriation difficulties that previously disrupted businesses and foreign investors.
Nigeria’s external reserves have strengthened alongside the increase in utilisation.
Gross reserves crossed $53 billion in August, reaching $53.11 billion as of August 24 compared with about $45.57 billion at the beginning of 2026.
That represents an increase of approximately $7.54 billion since the start of the year and gives the Central Bank of Nigeria a larger external liquidity buffer.
The naira has also remained relatively stable despite the substantial increase in foreign currency utilisation.
The currency closed at approximately N1,337 per dollar in the official Nigerian Foreign Exchange Market on August 28, strengthening from around N1,350 at the beginning of the week.
Foreign exchange turnover has meanwhile demonstrated the market’s increased capacity to match buyers and sellers, with trading exceeding $1 billion during one session in the final week of August.
The combination of record utilisation, rising reserves and greater exchange-rate stability provides an important indication of how Nigeria’s FX market has changed following reforms implemented by the CBN.
For several years, dollar scarcity prevented some companies from obtaining foreign currency when required and made the repatriation of investment proceeds difficult for international investors.
Those constraints contributed to the expansion of the parallel market and weakened confidence in Nigerian assets.
Improved liquidity has allowed more demand to move through formal channels while reducing some of the uncertainty businesses previously faced when planning dollar-denominated transactions.
The change has also become important for Nigeria’s attempt to attract foreign portfolio capital.
FTSE Russell is scheduled to restore Nigeria to Frontier Market status on September 21, 2026, three years after the country was removed following persistent difficulties encountered by international investors attempting to repatriate capital.
The restoration followed improvements in foreign exchange liquidity and the removal of material repatriation backlogs.
However, the composition of the latest utilisation figures shows that increased access to dollars has not translated evenly across the productive economy.
While total utilisation increased by almost 62 percent, industrial-sector demand declined more than 21 percent and overall visible imports were essentially unchanged.
Financial services, by contrast, absorbed $19.16 billion, equivalent to about 55 percent of all foreign exchange utilised during the first half of the year.
The divergence means the record $34.59 billion figure should not be interpreted solely as evidence of rapidly expanding merchandise imports or industrial investment.
Rather, it reflects both improved capacity within the formal FX market and a significant increase in service-related foreign currency transactions.
The next test for policymakers will be whether Nigeria can sustain sufficient dollar liquidity as economic activity and foreign exchange demand continue to expand.
Maintaining stronger reserves, attracting stable foreign capital and increasing non-oil export earnings will be important if utilisation continues rising without placing renewed pressure on the naira.
For businesses, however, the first-half numbers show that significantly more foreign currency is now moving through Nigeria’s economy than a year ago, with the formal market processing a record $34.6 billion during the first six months of 2026.
