Offshore Inflows Account for 59% of Nigeria’s FX Market Supply
Offshore or foreign portfolio investment inflows accounted for more than 59% of the US dollars available at Nigeria’s foreign exchange market, details released by the research unit of Coronation Merchant Bank Limited revealed.
FX liquidity fluctuations dragged the naira lower across its crosses, in the absence of significant monetary authority intervention. Last week, Naira reversed the appreciation recorded the previous week, depreciating by 0.71% or N9.64 at the official window to close at N1,371.04/US$1.
At the parallel market, the Naira traded flat week-on-week, closing at N1,400.00/US$1. Consequently, the spread between the official and parallel market rates narrowed to 2.11%, equivalent to N28.96/US$1.
Total FX inflows settled at US$0.87 billion, Coronation said in its Monday brief. Analysts reported that foreign portfolio investors (FPIs) accounted for the largest share, contributing US$0.52 billion.
The supply from offshore investors accounted for 59.15% of total inflows. Exporters accounted for US$0.22 billion, or 24.88%, and non-bank corporates for US$0.12 billion, equivalent to 14.45% of aggregate supply.
Other sources (including FDIs, individuals, and other corporates contributed US$0.01 billion, or 1.33% of total inflows in the market. Meanwhile, Nigeria’s gross external reserves increased by US$218.04 million to US$48.54 billion, according to data from the CBN.
“In the near term, we expect Naira to trade within a relatively stable range, supported by continued CBN interventions, improved foreign portfolio inflows, and sustained market reforms to enhance liquidity in the FX market”, Coronation Research said. Short-term Rates Steady as System Liquidity Approaches N6trn
