The Central Bank of Nigeria (CBN) has reported a remarkable increase in net foreign exchange (FX) inflows, which rose by 65.7% year-on-year (YoY) to $46.92 billion in the first ten months of 2024 (10m’24), compared to $28.31 billion during the same period in 2023.
According to the CBN’s Economic Report for the review period, total forex inflows into Nigeria also saw a 41% YoY increase, reaching $79.8 billion in 10m’24, up from $55.57 billion in 10m’23. Despite the strong increase in inflows, forex outflows saw a modest decline of 1.4% YoY, dropping to $29.84 billion in 10m’24 from $30.29 billion in 10m’23.
Growth in Autonomous and CBN-Related Forex Inflows
Autonomous forex inflows, which include sources outside the formal banking system, increased slightly by 0.06% YoY to $35.82 billion in 10m’24, compared to $34.4 billion in the previous year. However, autonomous outflows saw a sharp surge of 195%, rising to $7.08 billion in 10m’24 from $2.4 billion in 10m’23. This led to a 73% YoY increase in net forex inflows from autonomous sources, reaching $39.7 billion in 10m’24, up from $22.93 billion in 2023.
Meanwhile, inflows through the CBN increased significantly by 55% YoY, reaching $32.94 billion in 10m’24, compared to $21.25 billion in 10m’23. CBN-related outflows, however, decreased by 1.11% YoY, falling to $25.74 billion from $26.03 billion in the same period last year. This resulted in a dramatic 556.8% YoY surge in net forex inflows through the CBN, rising to $7.16 billion in 10m’24, from a net outflow of -$1.09 billion in 10m’23.
Month-on-Month Decline in Net Forex Inflows in October
The CBN’s Economic Report for October 2024 revealed a decline in month-on-month net forex inflows, primarily due to a decrease in inflows through the Bank. In September 2024, the economy recorded a net inflow of $4.86 billion, down from $6.35 billion in August 2024. Total forex inflows in September increased to $9.15 billion, up from $8.59 billion in the previous month. However, outflows rose sharply to $4.29 billion from $2.24 billion in August.
In terms of inflows, those through the CBN decreased to $4.48 billion in September from $5.22 billion in August, while autonomous inflows increased to $4.67 billion from $3.37 billion. On the outflow side, those through the CBN rose to $3.73 billion from $1.84 billion, while autonomous outflows also increased to $0.56 billion from $0.40 billion in September.
As a result, net inflows from autonomous sources increased to $4.11 billion, up from $2.97 billion in September, while the CBN recorded a net inflow of $0.75 billion, compared to a net outflow of $3.38 billion in the previous month.
Outlook and Implications
The surge in forex inflows, particularly through the CBN, reflects a strengthening of Nigeria’s foreign exchange position despite challenges. However, the increase in autonomous outflows and the month-on-month decline in net inflows suggest that external factors continue to play a role in shaping the forex landscape. The CBN’s ongoing efforts to manage forex liquidity will be key to maintaining stability in the coming months.
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