Exporters, non-bank corporates drive 64% weekly dollar inflows

Exporters and non-bank corporates contributed 64 percent of the total dollar inflows into the Nigerian Foreign Exchange Market (NFEM) window last week.

The contribution of exporters and non-bank corporates was the highest of all the groups.

The NFEM window recorded an inflow of $1.0bn last week, marking a 25.4 percent decline from $1.34bn recorded in the prior week, according to a report by Coronation Asset Management.

A breakdown of the dollar inflow contribution showed that the Central Bank of Nigeria (CBN) accounted for 14.29 percent of the total, while Foreign Portfolio Investors (FPIs) brought in 18 percent.

Non-bank corporates contributed 35.55 percent, whereas exporters brought in 28.06 percent. Inflows from ‘other sources’ accounted for 4.10 percent.

Read also: Dollar inflows through IMTOs surge by 65% on CBN reforms

Non-bank corporates refer to companies and business entities that are not classified as banks or financial institutions but still participate in economic activities that may involve borrowing, lending, or investing. These entities include: manufacturing companies, retail businesses, technology firms, oil and gas companies, telecom operators, and other businesses that operate outside the traditional banking and financial sector.

In the foreign exchange market last week, the naira slightly fell by 0.05 percent against the US dollar in the official spot market, closing at N1,517.93/$ on Friday.

The one-month forward rate closed at N1,577.80/$1, while the three-month forward contract rate closed at N1,654.10/$1. The one-year forward rate closed at N1764.98/$1

At the parallel market, popularly called the black market, the naira closed at N1,580, representing N5 loss compared to N1,575 closed on Monday.

Last week, the local currency lost 0.95 percent, closing at N1,585.00/$1 on Friday 14th March, 2025, in the black market.

According to data from the CBN, the foreign reserves increased by 0.03 percent week/week to close at $38.36bn as of March 14, 2025.

Turning to the Chinese Yuan (CNY), according to data from the CBN, the naira lost 0.024 percent to close at N209.67CNY/N.

The CBN, in October 2024, announced the introduction of a new Electronic Foreign Exchange Matching System (EFEMS), aimed at tackling speculation and improving transparency within Nigeria’s foreign exchange market.

According to a circular issued by Omolara O. Duke, CBN’s director, Financial Markets Department, the EFEMS will require authorised dealers to conduct all FX transactions in the interbank market through the new system. The goal of this initiative is to reduce speculative activities that often drive volatility in the FX market and to eliminate market distortions.

On November 26, 2024, the CBN directed all banks operating in the interbank FX market to adopt the Bloomberg BMatch system for trading, which became operational on December 2, 2024. Additionally, the EFEMS guidelines, including a minimum tradable amount of $100,000 and incremental clip sizes of $50,000, were designed to enhance transparency and efficiency.

Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), highlighted the transparency brought about by the EFEMS platform. He explained that clearer information on supply and demand has reduced information asymmetry and made demand more realistic. Yusuf also emphasised the importance of the CBN interventions and rising external reserves, which have bolstered investor confidence and mitigated panic.

Ayodele Akinwunmi, senior relationship manager at FSDH Merchant Bank, credited the increased supply and transparency in the market with the CBN’s recent FX policies.

He noted that customers can now access FX to meet obligations, with the current pricing reflecting market realities.