Abstract This study evaluates the critical role of foreign portfolio investment (FPI) in enhancing the liquidity and efficiency of Nigeria's capital markets from 1993 to 2023. FPI plays a pivotal role in broadening the spectrum of viable financing opportunities by promoting market depth and expansion. This analysis, utilizing an ex-post facto research design, draws on data from the Central Bank of Nigeria Statistical Bulletin to investigate the effects of macroeconomic variables, specifically the interest rate (InR) and exchange rate (ExR), on FPI. Using a 5% level of significance for panel data analysis, the Fully Modified Ordinary Least Squares (FMOLS) estimation method showed that the interest rate and FPI were related in a way that was opposite to what was expected. This was shown by an InR coefficient of -0.214 (t = -3.284, P < 0.05). Additionally, a significant influence of the exchange rate on FPI was identified, with an ExR coefficient of 0.0076 (t = -2.526, P < 0.05). These findings highlight the substantial impact of macroeconomic indicators such as interest and exchange rates on FPI flows into Nigeria. The research not only establishes a critical correlation between international portfolio flows and key domestic economic metrics—including GDP growth rate, foreign reserves, inflation, and interest rates—but also underpins the necessity for targeted policy measures. Policymakers should formulate and implement refined interest rate strategies to attract foreign portfolio investments, thereby enhancing Nigeria's economic landscape. Such strategic policy measures should aim to stabilise the macroeconomic environment, ensuring a conducive atmosphere for FPI and subsequently reinforcing Nigeria's financial market infrastructure. Keywords: Capital Markets' Liquidity, Exchange Rate, Financial Market Efficiency, Inflation, Interest Rate, Microeconomic Indicators.