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LAGOS – The total foreign exchange (FX) inflow into the Nigerian economy decreased by 4 per cent quarter-on-quarter (q/q) to $23.4 billion in Q2 2024 while on a year-on-year (y/y) basis, the total FX inflow increased by 41 per cent (y/y).
The q/q decline is significant as it comes after a marked rebound in the previous quarter, indicating a potential normalisationin inflow patterns. In terms of FX outflow, the total FX outflow from the economy declined modestly by 5 per cent q/q to $9.8 billion.
The FX inflow and outflow imply a net inflow of $13.6 billion, down -3 per cent q/q. This sum represents the second-highest net inflow to the economy since Q3 ’21, following the $14.0 billion recorded in Q1 2024.
According to analysts at FBNQuest Capital Research, the primary reason for the q/q reduction in the overall inflow was FX inflow through autonomous sources, which decreased by $1.4 billion, or -9% q/q to $14.9 billion, indicating some volatility in this segment.
In contrast, FX inflow through the CBN increased by +5 per cent q/q to $8.5 billion, indicating the CBN’s continued active role in managing FX liquidity.
Moving on to outflows, of the total FX outflow of $9.8 billion, outflow through the CBN accounted for approximately 58 per cent, or $5.7 billion of the total value of outflow.
As seen by the data, the CBN actively managed its forex sales, substantially reducing its outflows from $9.0 billion the previous quarter.
FX outflow through autonomous sources saw a significant increase, amounting to $4.1 billion, up 207 per cent q/q, indicating a shift in market dynamics—notably the CBN’s FX supply management strategies.
Significantly, net foreign exchange inflows to Nigeria’s economy rose by 67.8 per cent to $27.6 billion in the first half of 2024 from $16.44 billion in 2023.
This happened because of a 34.6 per cent y/y increase in net inflows through autonomous sources and a 170 per cent YoY increase in net forex inflow through the Central Bank of Nigeria.
Data from the CBN’s quarterly Economic Statistics showed that the forex inflow to the economy rose YoY by 41.6 per cent, to $47.73 billion in half year 2024, and from $33.7 billion in half year 2023. Also, gross inflows through autonomous sources grew by 47.6 per cent y/y to $31.15 billion in half year 2024 from $21.16 billion in half year 2023.
However, forex outflows from the economy rose by 16.3 per cent y/y to $20.12 billion in half year 2024 from $17.3 billion in half year 2023.
Similarly, outflow through autonomous sources rose sharply by 160.8 per cent YoY to $5.4 billion in half year 2024 from $2.07 billion in half year 2023.
Consequently, net forex inflow through autonomous sources rose 34.6 per cent y/y to $25.7 billion in half year 2024 from $19.09 billion in half year 2023.
The data also showed that inflows through CBN grew by 31.7 per cent YoY to $16.6 billion in half year 2024 from $12.6 billion in H1’23.
However, outflows through CBN declined by 15 per cent to $14.7 billion in half year 2024 from $17.29 billion in half year 2023.
Consequently, net forex inflow through the CBN rose 170 per cent, YoY to $1.86 billion in half year 2024 from -$2.65 billion in half year 2023.
IMTOs
Data by the Central Bank of Nigeria (CBN) has shown that Inflows through International Money Transfer Operators (IMTOs) grew by 47 per cent to $2.33 billion in the first six months of 2024 from $1.58 billion in the same period of 2023.
This is coming at a time when the CBN implemented policy measures that permits eligible IMTOs access to Naira liquidity at the official foreign exchange window.
Not long ago, the CBN instituted some policy measures to make the forex markets more efficient and increase remittance flows through formal channels.
In a circular signed by the acting Director of the Trade and Exchange Department, DrW.J. Kanya, the apex bank said that the measure, which was effective immediately, would enable IMTOs to access naira liquidity at the official window, thus, enabling the timely settlement of diaspora remittances.
The apex bank noted, “The bank has implemented measures that will enable eligible International Money Transfer Operators to access NGN liquidity at the CBN window.
These measures are aimed at widening access to local currency liquidity for the settlement of diaspora remittances.
“Therefore, eligible IMTO operators will be able to access the CBN window directly or through their authorised dealer banks to execute transactions for the sale of foreign exchange in the market.”
From the numbers released by the apex, it could be inferred that the country’s net foreign exchange inflows to Nigeria’s economy increased by 67.8 per cent to $27.6 billion in the first half of 2024 from $16.44 billion in 2023.
Figures from the CBN’s quarterly Economic Statistics also revealed that the development was because of a 34.6 per cent increase in net inflows through autonomous sources and a 170 per cent increase in net forex inflow through the Central Bank of Nigeria in the same period.
The forex inflow to the economy grew in the period by 41.6 per cent to $47.73 billion in half year 2024, and from $33.7 billion in half year 2023.
Gross inflows through autonomous sources also grew by 47.6 per cent year-on-year to $31.15 billion in half year 2024 from $21.16 billion in half year 2023.
The positive performance of FX inflows can be attributed to the CBN’s ongoing monetary policy adjustments, which aim to attract foreign investments while managing liquidity.
While the recent stabilisation in FX inflows is encouraging, a comprehensive strategy from the fiscal authorities, including boosting oil production and enhancing non-oil merchandise exports and services, is essential for attracting the much-needed FX inflow.
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