By FBNQuest Research
The Central Bank of Nigeria’s (CBN’s) most recent Quarterly Statistical Bulletin (QSB) shows that the total foreign exchange (FX) inflow into the Nigerian economy rose by 17% quarter-on-quarter (QoQ) and 78% year-on-year (YoY) to US$27.7bn in Q4 2024.
As illustrated in the chart below, FX inflows have shown an upward trend since Q4 2023. Sequentially, total FX inflow increased by 17% QoQ, primarily driven by a 38% QoQ growth in inflows from autonomous sources, which amounted to US$16.1bn and accounted for 58% of total FX inflows into the economy.
In terms of outbound flows, total FX outflow rose by 43% QoQ to US$12.1bn. Taken together, the data indicate a net FX inflow of US$15.7bn, the highest level recorded since Q3 2021.
Although FX inflow through the CBN decreased modestly by 4% QoQ to US$11.5bn, this decline was more than compensated for by the strong inflows from autonomous sources, which benefited significantly from substantial portfolio flows during the period.
According to QSB data, total portfolio investments advanced to US$5.6bn in Q4 from US$1.9bn in Q3 2024, primarily due to the hawkish policy stance of the monetary authorities, which created carry trade opportunities for offshore investors.
In contrast to inflows through the CBN, FX outflow through the CBN expanded by 39% QoQ to US$10.1bn, largely due to external debt service payments and other obligations during the period.
The cumulative foreign exchange flow (inflows and outflows) through the CBN resulted in a net FX inflow of US$1.4bn during the quarter.
FX outflows through autonomous sources also increased to US$1.9bn from US$1.1bn in Q3 2024. Combined, the net FX flows through autonomous sources increased by 34% QoQ to US$14.3bn.
Looking ahead, we expect FX inflows, particularly autonomous inflows, to continue benefiting from supportive monetary policy actions in the near term.
However, downside risks remain from global factors, including shifts in US monetary policy, changes in trade policy, and weaker external demand.
