September saw a three-month high for total inflows through the Investors and Exporters Window (I&E) window, rising by 49.1% month over month to $1.31 billion.
881.4 million dollars came in during August, based on information gathered from the FMDQ Securities Exchange.
An analysis of the activities showed that the decline in inflows was primarily due to overseas inflows, while local inflows contributed to the overall growth.
More specifically, non-bank corporate inflows (+89.3% m/m) and exporters (+49.7% m/m) contributed to the $55.2 percent m/m increase in local inflows to $1.26 billion.
The considerable fall of the currency since June has not deterred foreign investors from making large returns, as seen by the lackluster foreign inflows of (-20.5 percent m/m to $44.60 million).
“The FX Spot and Derivatives markets reported a turnover of $326.4 million for the week ending October 6, 2023, down 30.91% from $472.49 million on September 29, 2023.”
“FMDQ reports a 3.4% ($142.12 million) decline in FX Spot and a 79.9% ($3.93 million) drop in FX derivatives turnover, contributing to the weekly turnover decline.”
The 79.9% ($3.93 million) drop in FX Forwards turnover solely caused the weekly decline in FX derivatives turnover; no activity in exchange-traded FX Futures and Naira-Settled OTC FX Futures.
For the week ending October 6, 2023, the total value of transactions in the FX Spot market was $325.45 million. “The value of transactions completed in the week ending September 29, 2023, declined by 30.4%, totaling $142.12 million less than the previous week’s total of $467.57 million.”
“As of the week ending October 6, 2023, there were no transactions in the Exchange-Traded FX Futures and existing Naira-Settled OTC FX Futures markets.”
Moreover, the NAFEX rate averaged $/₦768.66 during the week of September 29, 2023, a decrease from $/₦774.01. This indicates a 0.70 percent ($/₦5.35) increase in the value of the Naira relative to the dollar.
“Due to slower forex reforms, Cordros Capital analysts predict near-term sluggishness in foreign inflows.”
“In the near future, we expect fragile FX liquidity as FX reform progress has significantly slowed down.”
“Expecting foreign investors’ cautious stance, waiting for CBN’s FX backlog resolution and interest rate direction, we anticipate limited short-term foreign inflows due to high inflation.”
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