Dollar inflow into the Nigerian autonomous foreign exchange (FX) market reached a five-month high in October, according to investment firms citing data from the FMDQ platform.
- This surge has helped limit outflow from Nigeria’s gross external reserves, which stood at $39.77 billion last week based on official data.- Analysts noted a significant increase in foreign investors’ confidence recently, with expectations that the US Fed rate cut will attract more hot money into Africa in the coming months.
- Total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose by 40.2% to $3.04 billion in October from $2.17 billion in September, as reported by Cordros Capital Limited.
- The improvement was largely driven by a substantial increase in inflows from foreign sources, which accounted for 44.6% of total inflows.
- In contrast, collections from local sources, which made up 55.4% of total inflows, have decreased for the second consecutive month, to analysts.
- In flows from foreign sources surged by 292.7% to $1.37 billion in October, up from $345.50 million in September, marking the highest level in seven months due to improved carry trade opportunities in the capital market during this period.
- This increase led to significant gains in the Foreign Portfolio Investment (FPI) segment, which rose by 510.9%, and the Foreign Direct Investment (FDI) segment, which saw a 44.6% increase.
- Conversely, inflows from the other corporate segment experienced a decline of 15.1%.
- On the other hand, inflows from local sources fell by 7.5% to $1.69 billion in October, down from $1.82 billion in September.
- This decline was driven by reduced collections from individuals, the Central Bank of Nigeria (CBN), and non-bank corporate segments, despite a slight improvement in the exporters/importers segment.
