Dollar inflow into the Nigerian autonomous foreign exchange (FX) market hit a 5-month high in October, investment firms said, quoting data from the FMDQ platform.
This has helped in limiting outflow from Nigeria’s gross external reserves, which printed at $39.77 billion last week, based on official data. Analysts said foreign investors’ confidence has increased significantly in the recent time, and the US Fed rate cut is expected to drive more hot money into Africa in the coming months.
Based on the data obtained from FMDQ, total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM) rose to a five-month high in October, increasing by 40.2 per cent to $3.04 billion in October from $2.17 billion in Sept., Cordros Capital Limited stated.
The improvement was primarily due to a substantial increase in inflows from foreign sources which accounted for 44.6% of total inflows. In comparison, collections from local sources which accounted for 55.4 per cent of total inflows dropped for the second consecutive month, analysts said in the report.
Specifically, inflows from foreign sources increased by 292.7 per cent to $1.37 billion from $345.50 million in September, reflecting the highest level in seven months in line with improved carry trade opportunities in the capital market over the review period.
As a result, higher accretions were recorded across the FPI (+510.9 per cent) and FDI (+44.6 per cent) segments, while inflows from other corporate segment (-15.1 per cent) dropped.
Elsewhere, inflows from local sources declined by 7.5 per cent to $1.69 billion in October from _1.82 billion Sept, driven by declines across collections from the individuals, CBN, and non-bank corporates segments, amid a marginal improvement in the exporters/importers segment.
