Nigeria net FX flow surges to $25.4bn in six months

• Published On: 09 August 2024 at 05:36

The Central Bank of Nigeria announced that net foreign exchange flows surged to $25.4 billion between January and June, representing a 55% year-over-year gain and indicating the effectiveness of its policy actions.

According to Nairametrics, the CBN confirmed this in a statement issued on Wednesday.

It further noted that the exceptional inflows were fuelled by diaspora remittances through official channels and a spike in capital importation, which reached $6 billion in June 2024.

The statement stated that "the CBN's policy objectives are yielding tangible results and bolstering market confidence." Net foreign exchange flows increased by 55% year on year between January and June, reaching $25.4 billion. This surge has been fuelled by an increase in capital imports, which reached $6 billion in June 2024, as well as record inflows from diaspora remittances via formal channels."

The CBN also stated that about $305 million in foreign exchange has been sold to approved dealers in the last three weeks via a two-way quote mechanism, which has been employed in recent months to increase liquidity in the interbank market.

According to the release, the CBN also offered $876 million to match consumer bids at an auction that closed on Wednesday, August 7, 2024.

This was accomplished using the Retail Dutch Auction System (RDAS), which is intended to ease FX sales to end users directly, fostering a more transparent market, lowering information asymmetry, and assisting with price discovery.

The statement read: "In the latest testament to the Central Bank of Nigeria's (CBN) ongoing commitment to support the proper functioning of the foreign exchange market by enhancing liquidity when necessary, the apex bank offered $876 million to fulfil customer bids at an auction concluded on Wednesday, August 7, 2024.

"In keeping with its commitment to providing transparent access to foreign exchange for all lawful consumers, the CBN's leadership has implemented an additional mechanism, the Retail Dutch Auction System (RDAS), to directly facilitate FX sales to end users.

"This method tries to make the market more transparent by minimising information asymmetry and promoting price discovery. It supplements the two-way quote system implemented in recent months to improve liquidity in the interbank market, through which over $305 million of foreign exchange has been sold to licensed dealers in the last three weeks."

In its most recent Retail Dutch Auction, the Central Bank of Nigeria sold $876.26 million to 26 qualifying banks at the rate of N1,495 per dollar.

This was reported in a statement signed by Dr Omolara Omotunde Duke, Director of the Financial Markets Department.

According to the CBN statement, 32 dealer banks submitted bids totalling $1.18 billion.