In March, Nigeria experienced a significant surge in foreign exchange inflows, reaching a five-year high, as investor confidence strengthened, buoyed by reforms implemented by the Central Bank.
March Sees Remarkable Increase in Inflows
According to data from FMDQ’s website, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) surged by 41.7 percent to $3.75 billion in March compared to $2.64 billion recorded in February. This marked the highest level since March 2019, which stood at $6.07 billion.
Foreign Sources Drive Surge
Inflows from foreign sources witnessed a substantial increase of 39.6 percent, reaching $1.54 billion, the highest in over four years.
Shifts in Transaction Dynamics
Local sources accounted for 59 percent of total transactions, while foreign sources contributed 41 percent, showcasing a balanced inflow pattern.
Diverse Local Contributions
Inflows from local sources soared by 43.2 percent to $2.21 billion in March, driven by substantial increases from Individuals, Non-Bank Corporates, and Exporters segments. However, inflows from the Central Bank declined by 65.7 percent, indicating a maturing market.
Quarterly Performance Highlights Growth
Overall, total inflows into the NAFEM window averaged $2.47 billion in Q1 2024, showing a significant improvement compared to previous quarters.
Impact on Naira’s Strength
The increased liquidity in the official market propelled the naira to a three-month high, closing at N1,251 per US dollar last Friday. Analysts anticipate the currency’s rally to continue.
CBN’s Reforms Garner Praise
The Central Bank’s efforts, including clearing a foreign exchange forwards backlog, raising interest rates, and implementing a transparent pricing mechanism, have earned rare praise from investors.
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Credit: Doris Chinwe Omemgbeoji