Step-up in FX Outflows Through the CBN

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Wednesday, August 2, 2017 9:50AM/FBNQuest Research

The net fx flows through the CBN were negative by US$760m in May but positive over the 12-month period to the tune of US$5.12bn. Inflows through the CBN, which consist of monies from the oil economy and the non-oil public sector, declined from US$2.87bn to US$2.26bn in May.

Outflows, in contrast, rose from US$2.16bn to US$3.02bn in the same month, which the commentary attributed to inter-bank utilization, external debt service, drawings under letters of credit and an unspecified “fx special payment”.

The surge in inflows to US$5.06bn in February coincides with the sale of Eurobonds to international investors.

The pick-up in outflows through the CBN in the chart since February coincides with the CBN’s multiple currency practices. We recall that May was the full month of operation for the investors’ and exporters’ window (NAFEX).

We are not comparing apples with apples but we note that the net inflow through the CBN of US$5.12bn over the 12 months is consistent with the increase in gross official reserves of US$3.94bn over the same period.

The data also capture flows through the economy as a whole (autonomous and CBN transactions). They show autonomous inflows of US$3.52bn in May. Remittances alone are running at close to US$2bn per month according to the balance of payments. Autonomous outflows amounted to just USS160m in the month. So the net inflow for May was US$3.36bn for autonomous funds and US$2.60bn for the economy (adjusted for the CBN).

The data from the CBN are provisional and subject to change. We suspect that the revisions are greatest for inflows outside the CBN.

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