The total inflows into the foreign exchange (forex) market rose by about 42 per cent last month to hit its highest level in the past five years as domestic and foreign investors continued to react positively to the nation’s macroeconomic reforms. NAFEM data, obtained from the FMDQ, showed that inflows rose by 41.7 per cent which translates to moving from $2.64 billion in February to $3.75 billion last month, the highest level since March 2019. The upsurge was driven by a significant increase in supplies from both domestic and foreign sources. The rally was notably driven by non-government sources, with fewer inflows from CBN.
A breakdown showed that domestic sources accounted for 59 per cent of total transactions while foreign sources contributed 41 per cent. Notably, inflows from foreign sources jumped by 39.6 per cent from $1.10 billion in February 202 to $1.54 billion last month. Inflows from local sources increased by 43.2 per cent from $1.54 billion in February to $2.21 billion last month, with double-digit growth across the non-CBN sources. While inflow from the CBN dropped by 65.7 per cent, inflows from individual domestic sources quadrupled by 405.8 per cent, non-bank corporate sources rose by 157.7 per cent while inflows from exporters grew by 14.6 per cent. With these, average total monthly inflows into the NAFEM in the first quarter of this year stood at $2.47 billion, representing an increase of 84.3 per cent and 126.6 per cent on the monthly average of $1.34 billion and $1.09 billion recorded in the first and fourth quarters of last year.
