FX inflows to Nigeria up 64% on Eurobond, IMF cash

Total foreign exchange (FX) inflow into the Nigerian economy increased sharply to $30.2 billion in the third quarter (Q3) 2021 from $18.4bn in the preceding quarter, according to the data from the Central Bank of Nigeria (CBN) statistical bulletin.

The sharp rise in inflows into the economy was mostly due to a 158 percent q/q (141percent y/y) increase in inflow through the CBN to $16.8bn, analysts at FBNQuest said in a new note Friday.

The rise in FX flows through the CBN reflect the IMF’s $3.3bn special drawing right (SDR) allocation to Nigeria, as well as proceeds of $4bn from Nigeria’s Eurobond issue, both of which occurred in August and September ’21 respectively.

Total forex inflows were also up by +14percent y/y. The FX inflow in Q3 is the highest quarterly inflow since Q1 ‘20 when the economy recorded robust inflows of $42.5bn, and it is roughly equivalent to the inflow in Q3 ’19, prior to the emergence of the pandemic.

The analysts noted that the FX inflow through the CBN accounted for about 56 percent of aggregate inflows in the economy.

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 $6.8bn.

FX inflows from autonomous sources were up 12 percent q/q to $13.3bn, with over 91 percent of the value from invisibles such as over-the-counter sales of securities, and domiciliary accounts.