By Milcah Tanimu
The Central Bank of Nigeria (CBN) has announced a significant uptick in foreign exchange (FX) inflows into the country during the first quarter (Q1) of 2024, representing 136% of the total inflows recorded in 2023. Blaise Ijebor, representing Olayemi Cardoso as the CBN’s director of risk, attributed this surge to major reforms aimed at liberalizing the foreign exchange markets.
Speaking at the 8th edition of the Vanguard Economic Summit in Lagos, Ijebor highlighted the impact of these reforms, which include enhancing transparency, reducing arbitrage opportunities, promoting stability, and improving liquidity in the market. He specifically mentioned the settlement of all valid FX backlogs as a commitment made by the CBN to boost stakeholder confidence.
The increase in investor confidence, bolstered by the central bank’s reforms, has led to a surge in FX inflows, reaching a five-year high in March. Data obtained from FMDQ’s website revealed a 41.7% increase in total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM), reaching $3.75 billion compared to $2.64 billion in February. Inflows from foreign sources spiked by 39.6% to $1.54 billion, the highest in over four years.
Furthermore, local sources accounted for 59% of total transactions, reflecting a 43.2% increase to $2.21 billion in March compared to $1.54 billion in February. This indicates a significant boost in domestic FX transactions, further contributing to the overall increase in FX inflows.
Ijebor emphasized the CBN’s commitment to maintaining a transparent and functional FX market, ensuring that price discovery is based on market-driven frameworks to promote long-term stability of the naira. He also addressed the challenge of high inflation in Nigeria, attributing it to various factors such as food inflation, rising costs of transport, infrastructure constraints, and security challenges in some food-producing areas.
In response to inflationary pressures, the CBN has tied its monetary policy to address these challenges, with early signs of deceleration in inflation rates based on March figures. The central bank remains dedicated to delivering on its mandate of promoting monetary and price stability in Nigeria.
Additionally, Tope Fashua, Special Adviser to the President on the economy, highlighted the government’s efforts to steer the Nigerian economy towards sustainability and positive growth. These efforts include securing significant investments into the country across various sectors, aiming to improve standards of living, enhance productivity, and ensure food security for all citizens.
Discussion about this post