In June 2023, there was a notable surge in Foreign Exchange (Forex) inflows via the investors and exporters (I&E) platform, marking a 23% increase from $1.14 billion in May to $1.41 billion. The Central Bank of Nigeria (CBN) announced this revelation in its latest report from July 2023.
The CBN’s report highlighted that this rise in inflows brought the combined total for May and June to $2.55 billion, a direct outcome of the Central Bank’s move to unify exchange rates. This recent data showed a consistent upward trend, with June recording a second consecutive month of growth in the I&E window, hitting $1.41 billion, as opposed to May’s $1.14 billion.
“The total inflows into the I&E window rose to $2.55 billion in the months of May and June following the unification of exchange rates by the Central Bank of Nigeria.
“The data indicated that inflows into the I&E window increased for the second consecutive month in June to $1.41 billion from $1.14 billion in May.
The Statement Said: “However, local inflow continued to sustain the market, hitting $1.11 billion in June because of higher inflows from non-bank corporates ($597.10 million) and exporters ($448 million).
“According to experts, the development in the FX market was expected to translate to improvements in FX liquidity conditions over the medium term as market participants.”
It’s noteworthy that local inflows played a pivotal role in sustaining the market, reaching $1.11 billion in June. This increase was primarily fueled by higher inflows from non-bank corporates ($597.10 million) and exporters ($448 million).
Market analysts and experts predict that this shift in the Foreign Exchange market is anticipated to have positive implications for FX liquidity conditions in the medium term, benefiting market participants.
This development comes in the wake of the Central Bank’s decision to eliminate the multiple exchange rate system in the Forex markets. Notably, the CBN lifted foreign exchange trading restrictions in June, which contributed to a depreciation of the naira against the dollar during that period.
The country had been grappling with a scarcity of dollars as foreign investors withdrew from local assets due to the decline in oil prices. This shortage prompted certain entities and individuals to turn to the unofficial black market, where the currency was valued lower, consequently leading to a widening gap between the official and unofficial exchange rates.