By Chris Agabi
Capital Importation into Nigeria peaked at $6 billion between January and June 2024, Data from the Central Bank of Nigeria (CBN) show.
Capital importation is the inflow of funds from abroad to fuel investment, trade, and manufacturing within a country.
The CBN data indicated a record inflows from diaspora remittances through formal channels forming a huge part of the capital importation.
CBN further informed that the the Net foreign exchange flows rose to $25.4 billion between January and June, marking a 55% year-over-year increase.
This is even as the CBN reaffirmed commitment to provide liquidity support to FX markets in Nigeria.
In the latest testament to the Central Bank of Nigeria’s (CBN) 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 (RDAS) 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 $305 million of foreign exchange has been sold to authorised dealers in the last three weeks.
The CBN’s policy objectives are yielding tangible results and bolstering market confidence.
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 percent of total market activities, CBN affirmed.
The CBN said it remained steadfast in its commitment to fostering a transparent, market-driven foreign exchange market, and it will continue to strengthen the market’s capacity to meet the needs of all legitimate participants.
