Foreign exchange inflows into Nigeria’s economy climbed to $24.55bn in the second quarter of 2024, marking an increase from $22.26bn recorded in first quarter, according to the Central Bank of Nigeria’s (CBN) latest economic report reviewed by THE WHISTLER.
The report highlights that inflows from both autonomous sources and the CBN contributed to the increase, with autonomous inflows reaching $16.12bn and those through the CBN rising to $8.43bn. In Q1.
Foreign exchange outflows, on the other hand, saw a significant reduction, dropping by 31.51 per cent to $7.37bn compared to Q1 2024. The report attributed this decrease to a reduction in outflows through autonomous channels, which declined by 8.79 per cent to $1.66bn, and through the CBN, which fell by 36.06 per cent to $5.71bn.
Overall, these trends boosted Nigeria’s net foreign exchange inflow by 49.39 per cent, with second quarter net inflows reaching $17.18bn, up from $11.50bn in the previous quarter.
Autonomous net inflows climbed to $14.46bn, up from $12.35bn, while the CBN saw a reversal in net flow, reporting a net inflow of $2.72bn compared to a net outflow of $0.85bn in the first quarter.
The Nigerian Foreign Exchange Market (NFEM) also experienced increased activity, as average turnover rose by 3.83 per cent to $204.43m from first quarter’s $196.88bn.
The exchange rate, however, depreciated by 5.86 per cent to N1,385.96 per dollar, primarily due to demand pressures.
Looking ahead, the CBN expressed optimism about Nigeria’s economic growth despite challenges. Projected increases in crude oil output and favorable oil prices are expected to drive this positive outlook. Additionally, tax and fiscal reforms are anticipated to spur further economic growth.
The bank warned, however, of several potential risks to this outlook, including global economic uncertainties, domestic insecurity, rising costs in energy and transportation, and continued monetary tightening.
It expects inflationary pressures to ease in the short term due to monetary policy measures, although climate-related issues, security challenges, and political instability could pose threats to this projection.
On Nigeria’s external position, the CBN remains positive, anticipating support from increased domestic oil production, strong crude prices, capital flows, and remittances.
However, risks to capital flows may emerge from delayed rate cuts in advanced economies and geopolitical tensions, which could lead to capital reversals.