US Rate Cuts May Spur Portfolio Inflows into Nigeria’s Fixed-Income Market

Nigeria may attract stronger foreign portfolio inflows into its fixed-income market if the US Federal Reserve proceeds with interest rate cuts, according to analysts.

TIMES OF NIGERIA gathered from BusinessDay that offshore inflows rose to USD 1.7 billion in July, up from USD 1.5 billion in June, accounting for about 45% of Nigeria’s total foreign exchange supply.

Analysts at FBNQuest said lower US interest rates would reduce the appeal of American assets and redirect capital to emerging markets like Nigeria.

The Central Bank of Nigeria reported that the naira appreciated to ₦1,535.47 per dollar at the official market, while reserves crossed USD 41 billion for the first time in over four years.

Meanwhile, inflation eased to 21.88% in July from 22.22% in June.

“The MPC of the CBN may consider an interest rate cut at its September 2025 meeting,” United Capital said in a report, noting that lower rates could reduce borrowing costs and trigger equity market rallies.

However, Norrenberger cautioned that aggressive monetary easing might weaken appetite for foreign inflows and add pressure on the naira, especially amid rising FX demand from tuition payments and travel outflows.

The MPC last month retained the Monetary Policy Rate at 27.5% and maintained tight parameters to consolidate disinflation gains while navigating inflation risks.