Nigeria: Net Forex Inflow Falls 26% to U.S.$3.87 Billion

20 January 2021

Net foreign exchange (forex) inflow into the economy fell by 26 percent, month-on-month to $3.87 billion in October from $5.23 billion in September last year.

The decline was driven by 11.9 percent reduction in foreign exchange inflow caused by 39.6 percent and 14.9 percent reduction in oil and non-oil receipts respectively.

The fall in net foreign exchange inflow was further worsened by a 23.3 percent increase in foreign exchange outflow due to increased dollar sales by the Central Bank of Nigeria (CBN) during the month.

The CBN disclosed these in its Economic Report for October 2020 just released on its website.

The report stated: "Available data showed that, aggregate foreign exchange inflow to the economy was $6.47 billion, compared with $7.34 billion in the preceding month and $9.23 billion in the corresponding period of 2019, indicating a decrease of 11.9 percent and 29.9 percent, respectively. The reduction in foreign exchange inflow through the economy was mainly attributed to the fall in foreign exchange earnings from the oil and non-oil receipts by 39.6 percent and 14.9 per cent, respectively.

"On the other hand, foreign exchange outflow through the economy, driven, largely, by outflow through the apex bank, rose by 23.2 per cent to US$2.60 billion, compared with the level in the preceding month. It, however, declined by 51.4 percent relative to the level in the corresponding month of 2019. The development relative to the preceding month was attributed mainly to the 22.8 percent increase in the foreign exchange outflows through the apex bank especially for interbank utilisation during the review period.

"Consequently, the foreign exchange transactions through the economy resulted in a net inflow of US$3.87 billion, a decrease of 26.1 per cent below the net inflow of US$5.23 billion in the preceding month but remained steady when compared with the level in the corresponding month of 2019."

On analysis of foreign exchange inflow and outflow through the CBN, the report stated: "Aggregate foreign exchange inflow through the CBN stood at $1.89 billion, a decrease of 22.0 per cent and 46.4 per cent below the levels in September 2020 and October 2019, respectively. This was attributed largely, to the 14.9 percent and 39.6 percent decrease in the non-oil and oil receipts through the apex bank to $1.47 billion and $0.42 billion, respectively, in the review period. The development was attributed to the low oil prices as well as the slow rate of recovery in most economies due, mostly, to the resurgence of COVID-19 in several countries globally, including the USA, Europe and the UK.

"Aggregate foreign exchange outflow through the CBN increased by 22.8 per cent to $2.35 billion from $1.91 billion in the preceding month. The apex bank continued efforts to meet the foreign exchange demands arising from the increase in cross-border travel activities in the review period."

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