Central Bank of Nigeria Report Reveals Surge In Foreign Exchange Inflow To $10.7 Billion In Two Months

Published 4 months ago
By Forbes Africa | Oluwatomisin Amokeoja
Naira Value Plunges on Street Amid ‘Stampede’ for Dollars
Photographer: Benson Ibeabuchi/Bloomberg via Getty Images

The Central Bank of Nigeria’s (CBN) May economic report, recently released, reveals a surge in foreign exchange inflow, reaching $6.03 billion, marking a significant 29.1% increase from the previous month. The data indicates robust economic performance with net inflows of $3.59 billion, showcasing a positive trend in the nation’s foreign exchange activity.

Despite the overall surge, the CBN experienced a decrease of 27.9% in foreign exchange inflows through the Bank, dropping to $1.70 billion from $2.36 billion in April. This shift resulted in a net outflow of $0.33 billion, contrasting with the net outflow of $0.03 billion in the preceding month.

The CBN report highlights a remarkable 87.2% increase in autonomous inflow, reaching $4.33 billion, demonstrating the resilience of external sources contributing to the country’s foreign exchange strength. While autonomous outflow also saw an uptick to $0.41 billion, the net inflow rose to $3.92 billion, surpassing the April figure of $2.05 billion. This positive trajectory indicates diverse channels contributing to Nigeria’s foreign exchange resilience.


Analyzing the intricacies of these fluctuations, economist Kelvin Emmanuel provides insights into the dynamics of Nigeria’s foreign exchange landscape, pointing out that the CBN report reveals a stark reality of disjointed FX markets in the country.

Emmanuel emphasizes that the autonomous FX flows, measuring inflows into Nigeria from sources outside registered government channels, have failed to bring about convergence in the parallel and Investors’ and Exporters’ (I&E) markets.

“The real effective exchange rate (REER) does not accurately reflect the willing buyer, willing seller rate, contributing to the existing disparities in the FX markets,” says Emmanuel.

One key factor highlighted by the economist is the behavior of companies importing USD into Nigeria through autonomous sources. Rather than immediately discharging these funds into the I&E markets, these companies prefer to retain their USD for internal FX operations. Emmanuel attributes this tendency to the substantial black-market premium, currently standing at 32.5%.


The economist stresses that addressing the challenges in the FX markets requires the CBN to take decisive actions. “Clearing outstanding FX forwards and reducing the incentive to divert funds from parallel markets to official markets is crucial,” states Emmanuel.

He further emphasizes that as long as companies find it more lucrative to hoard funds due to prevailing market conditions, the issue of disjointed FX markets is likely to persist.

However, financial expert and doctor of business administration, Iheakanwah Felix Arinzeh, expresses optimism to FORBES AFRICA about the findings, attributing the surge to various factors contributing to the nation’s economic resilience. “The increase in FX inflow can be attributed to factors such as increased oil production and exports, improved investor sentiment, and effective CBN interventions,” Arinzeh notes.

Arinzeh sees the surge in the share of autonomous inflows in the total FX influx as a positive indicator, signaling strong demand for Nigerian assets from foreign investors.


He emphasizes the significance of autonomous inflows, stemming from private sources like foreign direct investment and export proceeds. He highlights their resilience to fluctuations in oil prices, a crucial factor given Nigeria’s heavy reliance on oil as a primary source of foreign exchange earnings.

The surge in FX inflow is anticipated to yield several positive impacts on the Nigerian economy. These include improvements in the country’s balance of payments, bolstering foreign reserves, providing support for the naira, and enhancing the affordability of imports. However, Arinzeh cautions that the increase in FX inflow remains relatively fragile. He stresses the need for sustained efforts by the Nigerian government and the CBN to implement policies that support economic growth and maintain FX liquidity.