Analysts claim that a significant drop in inflows from domestic sources and the ongoing uncertainty surrounding international trade pose a downside risk to foreign exchange inflows from Foreign Portfolio Investors (FPIs), which could theoretically limit the expansion of the Nigerian Foreign Exchange Market’s (NFEM) total liquidity.
They warned that inflows from local sources fell to a four-month low, falling by 61.4% m/m to USD2.11 billion (May: USD5.48 billion), after declines in inflows from individuals (-91.6% m/m), CBN (-77.2% m/m), exporters/importers (-74.4% m/m), and non-bank corporates (-17.6% m/m). pieces
They underlined that persistent uncertainty in global trade still poses a risk to strong inflows from overseas counterparts, which could limit the expansion of total FX liquidity.
Total inflows into the Nigerian Foreign Exchange Market (NFEM) decreased by 28.1% month over month to USD4.84 billion in June (May: USD6.74 billion), according to data from FMDQ.
A significant drop in inflows from domestic sources (43.7% of total inflows) was the main cause of the outturn.
After losses in inflows throughout the individual (-91.6% m/m), CBN (-77.2% m/m), exporters/importers (-74.4% m/m), and non-bank corporates (-17.6% m/m) segments, inflows from local sources fell to a four-month low, falling by 61.4% m/m to USD2.11 billion (May: USD5.48 billion).
Read Also: Fake Drugs Valued at N20.5bn Handed to NAFDAC by Customs in Rivers
However, due to a rise in market confidence and a mildening of international pressures, foreign inflows (56.3% of total inflows) climbed by 116.8% m/m to USD2.73 billion (May: USD1.26 billion), the highest level in 29 months.
Consequently, inflows from other corporates (-39.8% m/m) and FDIs (-31.6% m/m) decreased, whereas the FPI (+133.6% m/m) category had a larger accretion.
Following declines in inflows across the individual (-91.6% m/m), CBN (-77.2% m/m), exporters/importers (-74.4% m/m), and non-bank corporates (-17.6% m/m) segments, Cordros Securities Researchers reported in their Weekly Economic and Market Report that inflows from local sources had fallen to a four-month low, falling by 61.4% m/m to USD2.11 billion (May: USD5.48 billion).
