Nigeria's forex market records upsurge as inflows hit $3.75 billion

The efforts of the Central Bank of Nigeria (CBN) to give life to the country’s economy with new reforms have yielded the expected benefits with the upsurge in forex inflow.

According to data from the FMDQ, the Nigerian Autonomous Foreign Exchange Market (NAFEM) recorded a 41.7% increment in the total forex inflow to hit $3.75 billion in March 2024, the highest figure recorded since 2019 ($6.07 billion)

The data further showed that a greater part of the inflow stemmed from increased deposits from both domestic (59.0%), and foreign sources (41.0%) with a large chunk from non-government sources, with less inflows from the CBN.

An analysis of the breakdown showed a 43.2% increase in the inflow recorded from local sources from $1.54 billion received in February 2024, to $2.21 billion in March 2024 driven by higher asset accumulations from Individuals (+405.8 per cent m/m), Non-Bank Corporates (+157.7% m/m), and Exporters (+14.6% m/m) segments, while inflow from the CBN (-65.7% m/m) declined.

Further breakdown showed a 39.6% increase in the inflow from foreign sources from $1.10 billion recorded in February 2024, to $1.54 billion in March representing a 50-month high.

According to The Nation, there has been an increase in the volume of forex being offloaded by currency speculators amid the CBN’s FX policy measures.

The CBN recently paid off verified foreign exchange backlogs (including the final tranche of $1.5 billion), and had also tightened the noose on illegal vendors in the Bureau De Change industry.

Analysts have linked the Naira’s great run to the CBN’s reforms aimed at ensuring liquidity and stability within the forex market as the currency has consistently appreciated against the US dollar and other foreign currencies since the first week of March 2024.