Nigeria’s Forex market surges with $3.75 billion inflows
The Central Bank of Nigeria’s (CBN) relentless efforts to revitalize the country’s economy through strategic reforms have sparked a significant upswing in the forex market, marking a crucial milestone in Nigeria’s economic trajectory. According to data from the FMDQ, the Nigerian Autonomous Foreign Exchange Market (NAFEM) witnessed a remarkable 41.7% surge in total forex inflows, soaring to $3.75 billion in March 2024. This notable increase represents the highest figure recorded since 2019, when inflows peaked at $6.07 billion.
A closer examination of the data reveals that a substantial portion of the inflows originated from both domestic (59.0%) and foreign sources (41.0%), with a notable contribution from non-government entities, signaling a diversified and robust influx of forex into the country. However, there was a decline in inflows from the CBN, underscoring a shift in the sources of forex.
Breaking down the numbers, there was a notable 43.2% surge in inflows from local sources, rising from $1.54 billion in February 2024 to $2.21 billion in March 2024. This increase was primarily driven by heightened asset accumulations across various segments, including Individuals (+405.8% month-on-month), Non-Bank Corporates (+157.7% month-on-month), and Exporters (+14.6% month-on-month). In contrast, inflows from the CBN witnessed a decline of 65.7% month-on-month.
Meanwhile, inflows from foreign sources experienced a significant uptick of 39.6%, climbing from $1.10 billion in February 2024 to $1.54 billion in March 2024, marking a 50-month high. This surge comes amid increased offloading of forex by currency speculators, spurred by the CBN’s proactive FX policy measures. Notably, the CBN’s recent efforts to settle verified foreign exchange backlogs, including the final tranche of $1.5 billion, coupled with intensified crackdowns on illegal vendors in the Bureau De Change industry, have contributed to enhancing market stability and liquidity.
Market analysts attribute the remarkable performance of the Naira to the CBN’s strategic reforms aimed at bolstering liquidity and stability within the forex market. Notably, the Nigerian currency has exhibited consistent appreciation against the US dollar and other foreign currencies since the outset of March 2024, reflecting the positive impact of the CBN’s initiatives.
As Nigeria continues on its economic recovery journey, the surge in forex inflows underscores the resilience of the country’s financial landscape and signals promising prospects for sustained growth and stability in the forex market. With the CBN’s reform agenda gaining traction, stakeholders remain optimistic about the trajectory of Nigeria’s economic resurgence in the months ahead.
