Foreign exchange (FX) inflows into the Nigerian economy rose by 17.5 percent to $17.18 billion in the first quarter (Q1) of 2023 from $14.62 billion in the fourth quarter (Q4) of 2022, according to the Central Bank of Nigeria (CBN).
This was disclosed by the apex bank in its monthly economic
report for the Q3 2023, released on its website.
FX inflow through the Central Bank increased to $7.17
billion, from $6.21 billion in the preceding quarter. Foreign exchange inflow
through autonomous sources increased to $10.08 billion from $8.41 billion in
the preceding period.
The Central Bank receives foreign exchange inflows from
crude oil sales and other sources of revenue on behalf of the government.
On the other hand, foreign exchange outflows through the
economy increased by 12.8 per cent to $9.98 billion, relative to $8.85 billion
in Q4 2022. Outflow through the CBN increased by 17.9 per cent to $8.86 billion
from $7.51 billion in the preceding quarter.
However, autonomous outflow fell by 16.2 per cent to $1.12
billion from $1.34 billion in the preceding quarter, the report stated.
Consequently, net foreign exchange inflow through the
economy increased by 24.7 per cent to $7.20 billion from $5.78 billion in the
preceding quarter. Similarly, net inflow through autonomous sources rose to
$8.89 billion from $7.08 billion in the preceding quarter. However, a net
outflow of $1.69 billion was recorded through the Bank, compared to a net
outflow of $1.30 billion in the preceding quarter.
According to the report, non-residents’ redemption of
matured investments and the withdrawal of foreign currency and deposits
resulted in a net reduction in financial liabilities. The financial account
recorded a net reduction in financial liabilities of $0.52 billion (0.5 percent
of GDP) in Q1 2023, compared with $0.85 billion (0.7 percent of GDP) in 2022Q4.
This reflected tight global financial conditions and
uncertainties surrounding the macro economy as a result of the country’s
general elections.
Non-residents’ claims on the economy reduced significantly
as investors redeemed matured investments. A capital reversal of $0.78 billion
was recorded in 2023Q1, in contrast to an inflow of $1.94 billion in 2022Q4.
The development was due to reversals of portfolio
investments and withdrawal of foreign currency and deposits from domestic money
banks. Also, the uncertainties surrounding the 2023 general elections and the
quest for a safer haven by investors contributed to the divestment.
A portfolio investment reversal of $1.17 billion was
recorded, in contrast to an inflow of $0.34 billion in 2022Q4, occasioned by
the redemption of investments in short-term debt securities by non-resident
investors.
Similarly, ‘other investment’ recorded a reversal of $0.86
billion, as against an inflow of $0.85 billion in 2022Q4, due to withdrawal of
foreign currency and deposits in Nigerian banks by non-residents.
However, Foreign Direct Investment (FDI) inflow improved
significantly to $1.20 billion, from $0.75 billion in 2022Q4, owing to inflow
of fresh equity, particularly to the telecommunications sector.
Aggregate financial assets recorded a disposal of $1.30
billion, in contrast to an acquisition of $1.09 billion in 2022Q4.
The development reflected a higher depletion in reserve
assets and the withdrawal of foreign currency deposits by banks and the general
government.
Other investment assets recorded a significantly lower net
acquisition of $0.24 billion, compared with $1.70 billion in 2022Q4.
Following the Central Bank’s effort to enhance liquidity in
the foreign exchange market and meet balance of payments needs, reserve assets
were depleted by $1.62 billion, relative to $1.11 billion in 2022Q4.
Acquisition of FDI assets was low at $0.02 billion, compared with $0.27 billion
in the preceding period, the report said. -BusinessDay
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