Covid-19: FX inflow at I&E window drops by 88.05% in May

Total foreign exchange inflows to the Investors and Exporters (I&E) window dropped by 88.05 percent from US$3.19 billion in January to US$381.2 million in May 2020, according to FSDH Research, an arm of the FSDH Merchant Bank Limited.

This is as a result of lower Foreign Portfolio Inflows (FPIs), following the lockdown and restriction of economic activities in April and May, 2020, occasioned by the spread of Coronavirus pandemic. A report by the firm showed total inflow dropped to US$459.2 million in April 2020.

FPI declined to US$57.7 million in May from US$2.04 billion in January 2020. The Central Bank of Nigeria (CBN) intervention increased from US$390 million in January 2020 to US$2.48 billion and US$2.89 billion in February and March respectively. The attendant effect of COVID-19 on oil price constrained the CBN’s capacity to intervene further as dollar inflow dwindled in April.

Analysts at FSDH Research noted that from mid-March the exchange rate faced significant pressure in the I&E window. The pressure stemmed from declining external reserves and falling crude oil prices. The report stated that The Naira fell from 367/US$ in early March to 401.6 in mid-April.

However, the FX market opened on Thursday morning with an indicative rate of N387.50k at the I&E window, leading to weakening by N0.54k when compared with N386.96k opened with on Wednesday.

Naira appreciated marginally by N0.14k after the foreign exchange market closed on Wednesday at N386.94k from N387.08k quoted on Tuesday at the I&E forex window, data from FMDQ revealed.

Nigeria’s currency has remained unchanged at N448 since three days on the black market.

“As oil prices increased in May following OPEC cuts and higher crude oil demand, external reserve situation also improved,” analysts at FSDH said. The price of Brent crude has risen to $40.35 per barrel as at today Wednesday from as low as $20 per barrel in March 2020.

Nigeria’s external reserves have risen to $36.51 billion as at June 8, 2020, which is a 5.85 percent increase compared to $34.49 billion recorded in April 8, 2020, according to the data obtained from the CBN’s website. The analysts noted that the Nigerian government’s ability to secure US$3.4 billion loan from the IMF also contributed to the improvement in the reserves position.

In the first quarter of 2020, foreign capital inflows into Nigeria amounted to US$5.85 billion. This is an increase of 54% from US$3.8 billion in 2019Q4 but a 31.2% decrease from US$8.5 billion recorded in 2019Q1.

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Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.