Marked Decline in FX Inflows Through the Economy in Q2 2021

Proshare

Tuesday November 30, 2021 / 09:45 PM / by FBNQuest Research / Header Image Credit: iStock

 

We see from the CBN's Quarterly Statistical Bulletin (QSB) for Q2 '21 that total fx inflows into the Nigerian economy declined -27% q/q and -16% y/y to USD18.4bn in Q2. This figure is the lowest quarterly inflow since Q1 '17.  It largely reflects a -32% q/q reduction in fx inflows through autonomous sources to c.USD11.9bn. Invisible fx inflows, which comprised about 93% of autonomous flows, fell by 34% q/q. The decrease in invisibles is due to similar percentage decreases in inflows into domiciliary accounts and over-the-counter purchases.

 

Fx inflows through the CBN also fell by -14% q/q to USD6.5bn on the back of a- 25% q/q reduction in fx inflows from the non-oil sources. The q/q decline was primarily driven by a decrease in fx inflow from the CBN's swap positions to c.USD1.5bn from  c.USD3.1bn in Q1 '21

 

We recall that within the period, Nigeria's fx reserves fell  to c.USD33.1bn, their lowest level in four years.

 

In response to the drop in fx inflows and increased demand pressure, the CBN implemented a series of measures, including switching to the importers and exporters (I&E) NAFEX rate of c.NGN411/USD from the previous official rate of NGN379, and suspending fx sales to Bureau de Change operators (BDCs).

 

In contrast to the q/q reduction in fx inflows, total fx outflows through the economy increased by 5% q/q to c.USD9.8bn. Fx outflows through the CBN which accounts for the bulk of outflows increased by 2% y/y to USD8.9bn. We see from the data that the CBN's fx interventions grew 15% q/q and 35% y/y during the quarter. 

 

The CBN's largest intervention was on the secondary market intervention sales (SMIS) window which consumed c.USD1.5bn (1% q/q) of total fx outflows. The CBN's sales to the segment grew 8% q/q to USD1.4bn, higher than its USD1.1bn fx sales to I&E NAFEX window. 

 

As seen from the above, the data support CBN's move to halt sales of scarce fx to BDCs, and channelling the same to more formal segments of the window that require the fx for productive purposes. 


Proshare Nigeria Pvt. Ltd.

 

Proshare Nigeria Pvt. Ltd.

 

Related News

  1. Remittance Flows Register Robust 7.3 Percent Growth in 2021
  2. NAFEX Rate Closes Flat WoW
  3. NAFEX Rate Appreciated by 0.69% WoW to N413.62 from N416.48
  4. Gross Official Reserves Rose by US$5bn to Hit US$41.8bn in October 2021
  5. NAFEX Rate Depreciated by 0.74% WoW to N416.48 from N413.43
  6. Can Commercial Banks Release the Personal Data of FX Defaulters on their Websites?
  7. NAFEX Rate Depreciated Marginally by 0.01% WoW to N413.43 from N413.40
  8. NAFEX Rate Depreciated by 0.10% WoW to N413.40 from N412.98
  9. Structural Issues Gulping Unavailable Foreign Exchange
  10. The Exchange Rate is Artificially Low; Osinbajo asks CBN to Bow to Market Forces
  11. NAFEX Rate Appreciated by 0.04% WoW to N412.98 from N413.14
  12. Thoughts and Reflections on the Forex Crisis - Proshare Research
  13. Gross Official Reserves Increased to US$36,8bn in September 2021
  14. NAFEX Rate Depreciated by 0.16% WoW to N413.14 from N412.48
  15. The Endless Roller Coaster of the Naira in 2021
  16. A Market Determined FX Regime is Nigeria's Best Option - Muda Yusuf
  17. NAFEX Rate Depreciated by 0.13% WoW to N412.48 from N411.95


Proshare Nigeria Pvt. Ltd.

READ MORE:
Related News
SCROLL TO TOP