Follow Us on Google
Financial analysts have urged fiscal authorities in Nigeria to focus on strategies to enhance non-oil exports and boost crude oil production.
This recommendation follows data from the Central Bank of Nigeria (CBN), showing a significant increase in foreign exchange (FX) inflows, which rose by 50 per cent quarter-on-quarter (q/q) and 36 per cent year-on-year (y/y) to $23.3 billion in the first quarter (Q1) of 2024.
The development represents the first rise in FX inflow after three consecutive quarters of decline.
However, data revealed further that the total FX outflow from the economy increased by 63 per cent q/q to $10.3 billion, marking the highest value of outflow since the second quarter (Q2) of 2022. When combined, the FX inflow and outflow imply a net inflow of $13 billion, up by 41 per cent q/q and around 78 per cent y/y, representing the largest net FX inflow through the economy since the third quarter (Q3) of 2021.
Analysing the report, Head of Research at FBNQuest Capital Research, Tune Abidoye, noted that FX inflow through the apex bank grew to 61 per cent a/q to $8.1 billion but unlike previous quarters, the data failed to provide a breakdown of key headline items such as oil and non-oil, which constitute the inflows through the CBN.
Other News
Out of the total FX outflow of $10.3 billion, 87 per cent or $9 billion was accounted for by outflow through the CBN.
Also in Q1 2024, the CBN sold a total of $3 billion to the market. These sales encompassed transactions made through the Investors and Exporters’ window, SME and invisibles.
Abidoye emphasized the need for more sustainable economic policies, suggesting that the current gains from CBN’s tight monetary policy and foreign portfolio investments are short-term.
He said, “Fx outflow through autonomous sources amounted to $1.3 billion, down -4 per cent q/q, but up by around 29 per cent y/y .Broadly speaking, the improvement in FX inflow can be attributed to the CBN’s tight monetary policy, which has helped attract foreign portfolio investments.
While the CBN’s tight monetary regime is helpful in the near term, the fiscal authorities need to take a more enduring approach, including increasing crude oil production and implementing policies to boost non-oil exports”.
