FX Inflows Mostly Autonomous


Tuesday, October 27, 2020 / 08:41 AM / by FBNQuest Research / Header Image Credit:  Shutterstock

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Our chart captures monthly fx inflows through the economy in the three years to June 2020. It shows movements through the CBN and through other (autonomous) parties, and will be repeated for fx outflows in a future daily note. Drilling down allows us to see the relative importance of certain transactions. Months of large CBN inflows tend to be those of large FGN borrowings: in this category we place Eurobond sale proceeds of US$2.50bn in February 2018 and US$2.87bn in November 2018 plus the IMF's US$3.36bn support under its rapid financing instrument this April.


Oil inflows, which we assume cover the NNPC's share of oil and gas exports, totaled US$15.85bn in 2019. The other item we highlight under CBN inflows is swap arrangements, which amounted to US$3.97bn last year. The net figure, adjusted for outflows, was US$500m.


Autonomous inflows exceeded US$10bn in four months under our coverage. In March 2019 the driver was capital importation, which appears under OTC transactions within invisibles. We recall a very large inflow from foreign portfolio investors (FPIs) at the time of the president's re-election.


On the three other occasions (November and December 2019, and January), very large flows into ordinary domiciliary accounts were responsible.


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Non-oil exports are shown as totaling US$2.51bn last year, and so well below the level indicated in the balance of payments.


Autonomous inflows are generally higher than those through the CBN due to a combination of FPI monies and inward remittances, which appear to be captured under separate headings in the Quarterly Statistical Bulletin. The reverse is the case for fx outflows.

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