Foreign exchange outflow jerks by 204.6% in one year

The aggregate for¬eign exchange outflow from the economy rose by 15.9 per¬cent to US$4.76 billion in one month and 204.6 percent above the levels ($1.56 billion) in the cor¬responding period of 2013, the Central Bank of Nige¬ria (CBN) has said.

Thus, foreign exchange flows through the econ¬omy resulted in a net in¬flow of US$7.4 billion in January 2014, compared with US$8.4 billion and US$10.6 billion in the pre¬ceding month and the cor¬responding month of 2013, respectively.

Analysts said last night that this implies much de¬pendence on importation and repatriation of funds by foreign investors.

The Economic Report for the month of January 2014 released by the CBN yesterday shows that ag¬gregate foreign exchange flow through the economy indicated that total inflow was US$12.13 billion, rep¬resenting a decrease of 2.9 and 0.2 percent below the levels at the end of the preceding month and the corresponding period of 2013, respectively. The development was driven by the decline in receipt from crude oil exports. Of the total inflow, re-ceipts through the CBN and autonomous sources accounted for 21.0 percent and 79.0 percent, respectively.

The invisible sector ac¬counted for the bulk (45.6 percent) of total foreign exchange disbursed in January 2014, followed by minerals and oil sector (17.8 percent).

Other beneficiary sec¬tors, in a descending or¬der included industrial sector (14.8 percent), food products (9.7 percent), manufactured product (8.3 percent), transport (2.9 percent) and agricultural products (0.9 percent).

Invisible sector, which include business ser¬vices, communications, construction and related engineering services, dis-tribution, education, envi¬ronmental services, finan¬cial services, health related and social services, tour¬ism and travel related ser¬vices, recreational services and transport services, consume the larger chunk of foreign exchange up to 102.0 percent year-on-year increase, according to Samir Gadio, emerging markets strategist, Stand¬ard Bank Plc.

Analysts are of the view that importation of items for production of goods suffer as Nigeria spend huge amount of cur¬rency for services particu¬larly traveling abroad for health services, education and tourism.

Meanwhile, the gross external reserves at the end of January 2014 stood at US$40.67 billion, in¬dicating a decline of 5.1 percent and 11.2 percent.