According to data obtained from FMDQ, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) experienced a substantial increase of 41.7% month-on-month, reaching USD3.75 billion in March. This surge, the highest recorded since March 2019’s USD6.07 billion, was driven by heightened inflows from both local and foreign sources.
Analysts attribute the uptick in inflows from local sources, which accounted for 59.0% of total transactions, to significant increases across various segments. In particular, Individuals, Non-Bank Corporates, and Exporters witnessed substantial month-on-month growth rates of 405.8%, 157.7%, and 14.6% respectively. However, inflows from the Central Bank of Nigeria (CBN) saw a decline of 65.7% month-on-month.
Concurrently, inflows from foreign sources surged by 39.6% month-on-month to USD1.54 billion, marking a 50-month high. Foreign investors responded positively to recent CBN initiatives and increased FX interventions aimed at ensuring liquidity and stability within the FX market.
Overall, total inflows into the NAFEM window averaged USD2.47 billion in the first quarter of 2024, reflecting a significant improvement compared to USD1.34 billion recorded in the fourth quarter of 2023 and USD1.09 billion in the first quarter of 2023.
In the near term, analysts anticipate further improvement in FX liquidity conditions, albeit still weak relative to historical standards. Increased CBN interventions have bolstered investor confidence, reduced speculative activities and market distortions, and improved liquidity in the FX market. Consequently, sustained improvement in foreign participation is expected over the short term.
