The Nigeria Autonomous Foreign Exchange Records $41.97bn Transactions In One Year

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The foreign exchange inflows through the Nigeria Autonomous Foreign Exchange (NAFEX) window also known as the Investors and Exporters Foreign Exchange (I&E Window), has recorded an inflow of $41.97 billion since its inception in April last year.

The NAFEX was introduced by the Central Bank of Nigeria (CBN) in the height of the foreign exchange crisis as a way to increase forex inflow and help rates convergence, seen as one of the successes of the CBN, I&E window

The stakeholders in the market are of the opinions that they expect the inflow to remain steady as political activities will soon commence.

According to analysts and traders in the forex market, CBN strategy has brought more transparency to the market, which uses a market determined rate.

For instance, 2018 alone, I&E window has recorded transactions close to $15 billion inflow as weekly average trade on the window has been around $1 billion in recent times.

The external reserves of the country have so far risen to $46.756 billion, according to figures on the website of the CBN.

In a statement to the 25th Seminar for finance correspondents, with the theme: “Sustaining Economic Growth Beyond Recession”, held in Uyo early March 2018, Godwin Emefiele, CBN’s Governor said, he was optimistic that the nation’s foreign reserves would grow to $50 billion before the end of the year, stressing that the reserves would continue to grow following the recent accretion the nation had recorded.

According to Johnson Chukwu, the Chief Executive And Managing Director of Cowry Assets Management Limited, the rising level of the foreign reserves of the country is also a contributory factor to the growing confidence in the country that has led to the steady inflow of forex on the window.

Chukwu noted that the inflows through of the I&E window is expected to maintain the tempo through the second and early parts of the third quarter.

“We expect that as political activities kick off in earnest, investors will begin to be moderate in their investments as it happens in every country,” he said.

Significantly, the Data released by the Financial Market Dealers Quotations (FMDQ) show that the total value traded through the I&E forex window in January 2018 settled at $5.25 billion, an increase of 36.87 per cent or $1.41 billion compared to the $3.87 billion value recorded in December 2017.

The inflow, however, dropped in February by 25.71 per cent or $3.90 billion, bringing the total value traded at the Window in the first two months to $9.15 billion.

The FMDQ data showed that foreign exchange transaction inflows into the country settled at $14.01 billion in January 2018, an increase of 8.91 per cent when compared with the $12.86 billion value recorded in December 2017.

The transactions, however, decreased by 7.78 per cent in February to $12.92 billion.

FMDQ noted that Inter-member trades recorded an increase of 11.67 per cent over the December figure of $0.99 billion to $1.10 billion in January 2018, while Member-CBN trades recorded $4.18 billion in January 2018, representing an increase of 17.98 and 57.58 per cents Month –on- Month and Year- on -Year respectively, a likely effect of the Secondary Market Intervention Sales (SMIS) introduced by the CBN in February 2017.

In February, Inter-member trades rose to $1.36 billion, while Member-CBN trades dropped to $4.11 as the effect of the Secondary Market Intervention Sales (SMIS) continued to boost activity in the FX markets.

 


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