High Interest Rates: Analysts Forecast $16.08bn Foreign Portfolio Inflows By Year-end

Foreign Portfolio Investments (FPIs) into Nigeria is projected to hit its highest levels 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 of 2025, FPI inflows reached $8.05 billion amid higher-for-longer monetary tightening. This is almost the entire inflows 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’.

“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 haven and bolting away from emerging markets like Nigeria.
The monetary authorities have left the key benchmark interest rate unchanged for two consecutive times this year after it aggressively raised borrowing rate by a cumulative 875 basis points to 27.5 per cent 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 monetary authorities have kept rates high to lure in inflows — a move that has begun to pay off.

The Monetary Policy Committee is due to meet in about two weeks’ time with analysts seeing legroom for a likely token rate cut as inflation continues to moderate amid sustained naira stability.

More portfolio 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 one 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.”