Dollar inflow quadruples to $1.3bn as Nigeria’s Central Bank rallies investors

The Central Bank of Nigeria says dollar inflow into the economy more than quadrupled in February to $1.3bn with most of that coming from diaspora remittances as well as proceeds from government securities bought by foreign portfolio investors.

Hakama Sidi Ali, the acting director, CBN Corporate Communications stated this in Abuja noting that the inflow has also continued in the current moth of March.

“The Central Bank of Nigeria (CBN) reported a significant increase in foreign exchange inflow into the economy in February 2024, with marked increments in remittance payments by Nigerians overseas and purchases of naira assets by foreign portfolio investors,” she said.

“The Bank’s data indicates that overseas remittances rose to US$1.3 billion in February 2024, more than four times the US$300 million received in January.

“Foreign investors purchased more than US$1 billion of Nigerian assets last month, with total portfolio flows of at least US$2.3 billion recorded thus far in 2024 compared to US$ 3.9 billion seen in total for last year,” she added.

Sidi Ali further noted that “higher FX inflows continued in March 2024, driven by increased investor interest in short-term sovereign debt following the recent adjustment to benchmark interest rates.”

Recall that that government securities issuances has so far been significantly oversubscribed, with foreign investors accounting for over 75% of bids received at the auctions conducted on March 1 and 6, 2024.

Olayemi Cardoso, CBN governor had set out a detailed strategy to curb inflation, stabilise the exchange rate, and spur confidence in the banking system and economy, using last month’s Monetary Policy Committee meeting and a conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.

“All the different measures we have taken to boost reserves and create more liquidity in the markets have started to pay off,” Governor Cardoso said.

“When people understand the real issues and see a strategy and a plan, things tend to calm down. Our objective today is to ensure that the market has supply, that the market functions, and that investors can come in and go out,” he noted.