Nigeria’s Total FX Inflows Increase by 15.6%, Hit $1.43bn in November
The Central Bank of Nigeria’s (CBN) initiatives at increasing FX supply got a huge boost as data obtained from FMDQ at the weekend, revealed that total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) increased by 15.6 per cent month-on-month (m/m) to $1.43 billion in November.
Total inflows into NAFEM had declined by 6.2 per cent m/m to $1.23 billion in October after hitting a 3-month high in September ($1.31 billion). However, higher inflows across local (81.5 per cent of total transactions) and foreign sources (18.5 per cent of gross transactions) in the period, drove the gain.
Analysing the breakdown, inflows from local sources rose by 8.2 per cent m/m to $1. 6 billion in November (October: $1.07 billion) driven by higher accretions from Individuals (+27.3 per cent m/m), non-bank corporates (+13.2% m/m) and Exporters (+3.8 per cent m/m) segments, without any inflow from the CBN.
Simultaneously, collections from foreign sources surged by 65.8 per cent m/m to $263.20 million (October: $158.70 million), although still significantly below the pre-pandemic level (Q1 2020 average: $1.28 billion).
Read Also:
However, continued FX demand–supply imbalance pressured the CBN foreign reserves to shed 1.1 per cent m/m in November to close at $33.0 billion. Meanwhile, in the currency market segment, the naira witnessed a divergent outing in the NAFEM and parallel market segments.
At the NAFEM segment, the price currency (Naira) weakened 2.1 per cent m/m against the base currency (USD) to N832.32/$1 at the end of November while in the parallel market, the Naira appreciated against the dollar by 0.9 per cent m/m to N1150.00/$1. Also, activity level in the NAFEM strengthened 27.9 per cent to settle at a monthly average of $140.6 million.
Reacting to the development, analysts said that the Naira is likely to trade within a similar band across FX segments barring any significant changes in market’s liquidity. Analysts at Cordros Research, said, “Over the short to medium term, we anticipate a modest improvement in FX liquidity conditions, though frail relative to historical standards.
Nonetheless, we expect foreign investors to closely monitor the development in the FX space, particularly focusing on the expected FX inflows as guided by the authorities, CBN’s actions in clearing its FX backlogs, and firm direction of short-term interest rates”.