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In the month of March, foreign exchange (FX) inflows into Nigeria reached a five-year high, driven by improved investor confidence and the central bank’s reforms. Data obtained from FMDQ’s website revealed that total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) increased by 41.7 percent to $3.75 billion in March, compared to $2.64 billion in February. This is the highest level since March 2019, when inflows amounted to $6.07 billion.
Of the total transactions, local sources accounted for 59 percent, while foreign sources contributed 41 percent. Inflows from foreign sources spiked by 39.6 percent to $1.54 billion, the highest in over four years. On the other hand, inflows from local sources increased by 43.2 percent to $2.21 billion in March, driven by higher accretions from individuals (405.8 percent), non-bank corporates (157.7 percent), and exporters (14.6 percent) segments. However, inflows from the Central Bank of Nigeria (CBN) declined by 65.7 percent, indicating the growing maturity of the market.
The improved liquidity in the official market has had a positive impact on the Nigerian currency. The naira reached a three-month high, closing at N1,251 per US dollar at the official market. This rally is expected to be sustained, with analysts optimistic about the currency’s performance.
The Central Bank of Nigeria has received praise from investors for clearing a protracted foreign exchange forwards backlog, raising interest rates, and implementing a more transparent pricing mechanism for foreign exchange.
This article was updated 1 month ago
