The Central Bank of Nigeria has announced that net foreign exchange inflows into the country reached $25.4 billion in the first half of 2024, representing a 55% increase compared to the previous year.
The bank attributed this significant growth to its policy measures.
This development follows its recent $876 million auction to 26 banks aimed at addressing unmet FX demands.
In a statement on Thursday, the apex bank highlighted that this surge was driven by increased capital importation, which totaled $6 billion in June 2024, along with record inflows from diaspora remittances through official channels.
The statement partly read, “The CBN’s policy objectives are yielding tangible results and bolstering market confidence. Net foreign exchange flows rose to $25.4bn between January and June, marking a 55 per cent year-over-year increase.
“This growth has been driven by a rise in capital importation, which reached $6bn in June 2024, and record inflows from diaspora remittances through formal channels.”
The CBN also reported that more than $305 million in foreign exchange has been sold to authorized dealers over the past three weeks using a two-way quote system, which has been implemented in recent months to boost liquidity in the interbank market.
In a statement, the CBN revealed that it offered $876 million during an auction concluded on Wednesday, August 7, 2024, to fulfill customer bids.
This was conducted through the Retail Dutch Auction System, aimed at directly providing FX to end users, enhancing market transparency, reducing information asymmetry, and supporting price discovery.
“In the latest testament to the Central Bank of Nigeria’s ongoing commitment to support the proper functioning of the foreign exchange market by enhancing liquidity when necessary, the apex bank offered $876m to fulfil bids submitted by customers at an auction concluded on Wednesday, August 7, 2024.
“In line with its pledge to provide transparent access to foreign exchange for all legitimate customers, the CBN’s leadership has introduced an additional mechanism through the Retail Dutch Auction System to directly facilitate FX sales to end users.
“This approach aims to foster a more transparent market, reducing information asymmetry and supporting price discovery. It complements the two-way quote system deployed over the past few months to enhance liquidity in the interbank market, through which over $305m of foreign exchange has been sold to authorized dealers in the last three weeks,” the statement read.
The apex bank also stated that it accounted for less than 5% of the $43 billion foreign exchange turnover recorded in the official market as of July 2024.
In its statement, the CBN highlighted that the FX market is demonstrating signs of improvement and greater depth, with more robust and diversified sources of liquidity contributing to the ongoing convergence of exchange rates across all market segments.
“The foreign exchange market is also showing signs of improvement and increased depth, with more robust and diversified sources of liquidity contributing to the sustained convergence of exchange rates across all segments of the market. The official market recorded a turnover of $43 billion in customer transactions by the end of July 2024, with CBN-supplied liquidity representing less than 5 per cent of total market activities,” the statement added.
The CBN also emphasized its commitment to maintaining a transparent, market-driven foreign exchange environment and pledged to continue enhancing the market’s ability to meet the needs of all legitimate participants.