SAT, JUNE 10 2023-theGBJournal |Total inflows into the Investors & Exporters Window (IEW) increased by 46.8% m/m to US$1.14 billion in May 2023, relative to US$775.70 million in April, according to the data obtained from the FMDQ.
Although foreign inflows settled higher to US$207.10 million (April: US$96.20 million), it remains underwhelming relative to pre-pandemic levels (2019FY monthly average: US$1.56 billion) because of the lingering FX liquidity constraints, an overvalued currency, and the absence of significant macro reforms.
Simultaneously, inflows from local sources increased by 37.1% m/m to US$931.50 million, primarily driven by higher inflows from Exporters (+42.7% m/m to US$437.80 million | 47.0% of local inflows) and non-bank corporates (+30.3% m/m to US$440.00 million | 47.2% of local inflows).
Analysts at Cordros Reseach say they anticipate that the FX liquidity conditions will remain frail over the short-to-medium term without reforms to attract US dollar inflows into the economy.
The low FX liquidity conditions are also likely to be driven by lingering global uncertainties and higher global interest rates, limiting foreign inflows to the economy.
”Thus, foreign investors will need convincing actions regarding flexibility and clarity in the FX framework as we advance,” Cordros says.
Twitter-@theGBJournal|Facebook-the Government and Business Journal|email:gbj@govbusinessjournal.com| govandbusinessj@gmail.com
