Nigeria’s net foreign exchange (forex) inflows rose significantly by 44.8% year-on-year (YoY) to $41.89 billion in the first eleven months of 2024 (11M’24), up from $28.92 billion recorded in the same period of 2023. This growth reflects improved forex liquidity in the economy, according to data from the Central Bank of Nigeria (CBN) monthly economic reports.
Key Highlights
– **Aggregate Forex Inflow**: Total forex inflows into the economy increased by 27.5% YoY to $77.16 billion in 11M’24, compared to $60.54 billion in 11M’23.
– **Forex Outflows**: Outflows also rose by 11.5% YoY to $35.27 billion in 11M’24, up from $31.62 billion in 11M’23.
– **Net Forex Inflow**: The net inflow of $41.89 billion represents a significant improvement, driven by increased inflows and moderated outflows.
Breakdown of Forex Flows
1. **Autonomous Sources**:
– Inflows through autonomous sources grew by 8.2% YoY to $41.31 billion in 11M’24, up from $38.16 billion in 11M’23.
– Outflows through autonomous sources surged by 142% YoY to $7.44 billion in 11M’24, compared to $3.07 billion in 11M’23.
– Consequently, net forex inflow through autonomous sources declined by 3.4% YoY to $33.88 billion in 11M’24, down from $35.09 billion in 11M’23.
2. **Central Bank of Nigeria (CBN)**:
– Inflows through the CBN jumped by 60% YoY to $35.85 billion in 11M’24, up from $22.38 billion in 11M’23.
– Outflows through the CBN decreased by 2.5% YoY to $27.83 billion in 11M’24, down from $28.55 billion in 11M’23.
– As a result, net forex inflow through the CBN rose sharply by 299% YoY to $8.02 billion in 11M’24, compared to a net outflow of $6.17 billion in 11M’23.
November 2024 Performance
In its latest monthly economic report, the CBN noted a decline in net forex inflow in November 2024 due to reduced inflows through the bank. Key figures for November include:
– **Net Forex Inflow**: $5.95 billion, compared to $4.86 billion in October 2024.
– **Aggregate Inflow**: Declined to $8.40 billion from $9.15 billion in October.
– **Outflow**: Decreased to $2.45 billion from $4.29 billion in the preceding month.
Economic Implications
The rise in net forex inflows reflects improved foreign exchange liquidity, which is critical for stabilizing the naira and supporting economic growth. However, the sharp increase in outflows through autonomous sources highlights ongoing challenges in managing forex demand and retaining foreign capital.
Related Developments
The forex inflow growth coincides with other economic trends, including:
– A net foreign investment outflow of N20.19 billion from the stock market in January 2025.
– An 18% increase in money supply to N110.97 trillion as Nigerians ramp up savings.
– A 119% rise in raw materials imports to N4.53 trillion, as reported by the Manufacturers Association of Nigeria (MAN).
Conclusion
The significant increase in net forex inflows underscores positive developments in Nigeria’s foreign exchange market. However, policymakers must address the rising outflows and ensure sustainable forex management to maintain economic stability and investor confidence.
