Nigeria sees surge in forex inflow as Tinubu’s reforms start to pay off
* Foreign portfolio inflows reached $1.3bn in February into the country in February 2024 compared to $300 million in the preceding month.
Foreign exchange inflows to Nigeria rose to $2.3 billion in February, the Central Bank of Nigeria (CBN) said on Friday, fuelled by renewed interest from foreign investors and a rise in overseas remittances, reports Reuters.
Nigeria’s economy has been experiencing crippling dollar shortages that have pushed its naira currency to record lows in recent weeks and forced the apex bank to devalue the naira twice in less than a year.
CBN spokesperson Hakama Sidi Ali said foreign investors bought at least $1 billion of Nigerian assets last month, bringing total receipts of portfolio inflows to $2.3 billion. That compares with $3.9 billion for the whole of 2023.
CBN data also showed overseas remittances more than quadrupled to $1.3 billion in February, compared with $300 million a month earlier, Sidi Ali said in a statement.
“All the different measures we have taken to boost reserves and create more liquidity in the markets have started to pay off,” CBN Governor Olayemi Cardoso said in the statement.
The CBN’s series of measures to boost forex liquidity include limiting how much banks can hold in foreign currency, capping their net open positions at 20% of shareholders’ funds, and outlawing street-trading of foreign currency.
Higher forex inflows have continued in March, Sidi Ali said, driven by increased investor interest in short-term sovereign debt after the CBN hiked its key interest rate by 4 percentage points to 22.75%, the highest in around 17 years to tame soaring inflation.
At the CBN’s Open Market Operation auction on March 6 when it sold securities worth 1.053 trillion naira, bids from foreign investors accounted for 79% of the total, or $530 million, Sidi Ali said.
