US Dollar Inflows to Nigeria’s FX Market Climbs by 53%
As foreign investors’ confidence continue to rise, the volume of US dollar inflows into Nigeria saw a significant boost in January. The Central Bank of Nigeria’s (CBN) FX reforms has continued to drive foreign portfolio investors’ attention into the local economy to take advantage of elevated yield in fixed interest securities assets.
In the same way, the equities market has also seen an influx of foreign interest participation amidst banking sector recapitalisation. Based on the data obtained from FMDQ, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose by 53.3% to USD4.74 billion in January from USD3.09 billion in December, 2024.
The improvement, according to Cordros Capital Limited was primarily due to a substantial increase in inflows from foreign sources and collections from local sources. Further details revealed that foreign sources accounted for 48.8% of the total inflows in the forex market while collection from local sources accounted for 51.2% of the sum.
Specifically, inflows from foreign sources increased by 192.1% In January to USD2.31 billion from USD790.30 million in December – the highest level in twenty-three months. This strong FX inflows boost was supported by increased market confidence and improved carry trade opportunities in the capital market.
As a result, the foreign portfolio investors segment, which rose by +213.0% month on month, recorded higher accretion, while inflows from other corporates and foreign direct investment segments dropped by 45.4% and 36.5% respectively.
At the same time, inflows from local sources increased by 5.6% to USD2.43 billion from USD2.30 billion driven by increase in inflows from individuals, exporters/importers and CBN segments, amid a decline in the non-bank corporates segment.
FX supply from individuals climbed 33.2% in January, exporters inflows rose by 20.9% and 20.1% increase in CBN inflows was reported though non-bank corporates declined by 10.7% in the same month.
Barring any shock, analysts at Cordros Capital Limited anticipate FX inflows to remain robust in the short term due to improved market confidence, which has been bolstered by the adoption of the Electronic Foreign Exchange Market System (EFEMS). Zenith Bank Hits 52-Week High in Fresh Rally Ahead of Earnings
