Within Six Months, Net Foreign Exchange Flows Amounted to $25.4 billion — CBN

The net inflow of foreign exchange into Nigeria reached $25.4 billion in the first half of 2024, according to the Central Bank of Nigeria, which continues to support the healthy operation of the foreign exchange market by augmenting liquidity as needed.

The increase represents a 55% increase over the level recorded year over year, according to a statement released by the apex bank on Thursday.

It further mentioned that record inflows of remittances from the diaspora through official channels and an increase in capital importation, which hit $6 billion in June 2024, have driven this expansion.

The recent event takes place in the context of its $876 million auction to 26 banks to settle outstanding foreign exchange requests.

The apex bank offered $876 million to fulfil bids made by customers at an auction that ended on Wednesday, August 7, 2024. This is the most recent example of the Central Bank of Nigeria’s (CBN) ongoing commitment to support the proper functioning of the foreign exchange market by enhancing liquidity when necessary, according to the statement.

As part of its commitment to give all eligible clients transparent access to foreign exchange, the CBN’s leadership has added a second way to help with FX sales to end users by using the Retail Dutch Auction System (RDAS).

This strategy seeks to promote price discovery, lessen information asymmetry, and increase market transparency. It is an addition to the two-way quote system that has been used in recent months to improve interbank market liquidity, allowing for the sale of over $305 million in foreign exchange to authorized dealers in the last three weeks.

“The CBN’s policy goals are supporting market confidence and producing observable results. Between January and June, net foreign exchange flows increased by 55% year over year to $25.4 billion. Record inflows of diaspora remittances through official channels and an increase in capital importation—which hit $6 billion in June 2024—have propelled this expansion.

“The foreign exchange market is exhibiting indications of amelioration and augmented profundity, as a result of the persistent convergence of currency rates throughout all market segments, which is supported by more resilient and varied sources of liquidity. By the end of July 2024, the official market had registered a $43 billion turnover in client transactions, with less than 5% of all market activity coming from liquidity supplied by the CBN.

“The CBN is unwavering in its dedication to promoting an open, competitive foreign exchange market and will keep enhancing the market’s ability to serve the interests of all eligible players.”