The CBN’s latest Quarterly Statistical Bulletin (QSB) for Q3 ’21 shows that total fx inflow into the Nigerian economy improved markedly to USD30.2bn from USD18.4bn in the preceding quarter. Total fx inflows were also up by +14% y/y. The fx inflow in Q3 is the highest quarterly inflow since Q1 ’20 when the economy recorded robust inflows of USD42.5bn, and it is roughly equivalent to the inflow in Q3 ’19, prior to the emergence of the pandemic. The sharp rise in inflows into the economy was mostly due to a 158% q/q (141% y/y) increase in inflow through the CBN to USD16.8bn.
We see from the chart below that fx inflow through the CBN accounted for c.56% of aggregate inflows into the economy, contrary to recent trends as shown in the chart below.
The rise in fx flows through the CBN reflect the IMF’s USD3.3bn special drawing right (SDR) allocation to Nigeria, as well as proceeds of USD4bn from Nigeria’s Eurobond issue, both of which occurred in August and September ’21 respectively.
Like Nigeria, a number of emerging and frontier market economies tapped the international debt markets last year, thanks to the accommodative policies of developed countries’ central banks. Within Africa, Egypt, Ghana and Kenya, to name a few, successfully issued Eurobonds in FY ’21. Notably, Egypt tapped the market twice for a combined sum of USD6.8bn.
Fx inflows from autonomous sources were up 12% q/q to USD13.3bn, with over 91% of the value from invisibles such as over-the-counter sales of securities, and domiciliary accounts.
Total fx outflows from the economy increased to USD10.2bn from USD9.8bn in Q2 ’21. The CBN continued to be the most important source of fx for outbound transactions, accounting for c.USD8.0bn of transaction value, down from USD8.9bn in Q2.
The CBN’s various interventions and allocation of fx through its various windows fell by c.10% q/q to USD4.5bn. The reduction can be attributed in part to the bank’s decision to stop selling fx to Bureau de Change (BDC) operators last year.
Fx sales to the BDC segment plummeted to USD445m, reflecting fx sales for July when the CBN halted sales to the segment. Sales for the secondary market intervention sales (SMIS) segment improved to USD2.1bn from USD1.5bn in Q2.