SAT, AUGUST 05 2023-theGBJournal |According to the data obtained from FMDQ, total inflows into the Investors & Exporters Window (IEW) declined by 65.7% m/m to US$608.00 million in July (June: US$1.77 billion) – the lowest level since April 2021 (US$564.20 million).
Analysing the breakdown provided, we highlight that the decline was on the back of broad-based contraction across both the local (92.3% of total transaction value) and foreign (92.3% of total transaction value) investors.
Precisely, inflows from local investors dipped by 60.6% m/m to US$561.00 million in July (June: US$1.42 billion), given the slowdown across the local segments – CBN (-70.0% m/m), Individuals (-51.2% m/m), Non-bank corporates- (-65.6% m/m) and Exporters (-63.9% m/m).
In the same vein, inflows from foreign sources remained underwhelming, decelerating by 86.5% m/m to US$47.00 million (June: US$: 347.30 million) as foreign investors remained cautious about returning in their droves despite the FX market liberalisation, as FX backlogs remain uncleared.
Looking ahead, we expect FX liquidity conditions to remain frail in the near term, amid the lingering reforms in the FX market.
We also anticipate weak foreign inflows in the short term, as foreign investors will likely adopt a wait-and-see approach in the near term as they await the CBN’s actions in clearing its FX backlogs and the direction of short-term interest rates amid high inflation.
Meanwhile, after ten consecutive weeks of decline, Nigeria’s FX reserves increased by USD13.14 million w/w to US$33.97 billion (02 August 2023).
Likewise, the naira appreciated by 4.4% to N743.07/USD at the I&E window (IEW), with total turnover at the window (as of 03 August 2023) declining by 15.9% WTD to US$334.05 million, as trades were consummated within the N651.00 – N851.00/US$ band.
In the Forwards market, naira values across the 1-month (-2.8% to NGN795.98/USD), 3-month (-3.3% to N811.52/USD), 6-month (-3.9% to N839.89/US$) and 1-year (-1.8% to N875.44/US$) contracts were weaker.
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