MON, 14 NOV, 2022-theGBJournal| Nigeria’s FX liquidity conditions remain weak at the Investors and Exporters Window (IEW) despite the Central Bank of Nigeria’s (CBN) efforts at boosting FX inflows to the IEW through incentivising non-oil exports.
Expressly, inflows into the IEW declined to their lowest level since April 2021, falling by 41.2% m/m to USD676.80 million in October (September: US$1.15 billion).
On the one hand, the inflows from foreign investors declined for the fourth consecutive month to US$72.0 million – the lowest print in 19 months, given the lack of reforms in the FX framework, higher global interest rates and, weak macroeconomic narratives.
On the other hand, domestic investors’ inflows declined by 42.5% m/m to US$604.80 million as the euphoria from exporters’ (-46.2% m/m) inflows cooled.
Over the short-to-medium term, we do not expect liquidity conditions to retrace towards pre-pandemic levels due to still weak inflows from foreign investors (53.8% of total IEW inflows in 2019).
We think foreign investors will need more convincing actions from the CBN as regards flexibility and clarity in the foreign exchange framework before a resurgence of interest in the market, as witnessed in 2017 when the IEW was established.
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