Nigeria’s foreign exchange (FX) inflows into the Investors and Exporters (I&E) window improved gradually in the third quarter (Q3) 2020, largely driven by the Central Bank of Nigeria (CBN) intervention, which accounted for 48.2% of total inflows in the quarter.
A report by FSDH research showed that total forex inflows into the I&E Window in Q3 2020 stood at US$1.94 billion from US$1.2 billion in the second quarter (Q2) 2020. This amounted to a 61.7% increase quarter on quarter.
The Central Bank intervention increased in Q3 2020 to US$434.6 million (US$434.5 million in September alone) from less than a million-dollar in Q2 2020.
The effect of COVID-19 on oil prices continues to constrain the Central Bank’s capacity to intervene in the I&E window.
Forex Inflows from exporters increased in Q3 2020 by 200% to US$287.2 million from US$95.8 million in Q2 2020. Though inflows from non-bank corporate declined by 5.8% to US$620.4 million, it accounted for 32% of total inflows in Q3 2020.
Also, turnover in the I&E Window improved in the third quarter of 2020 compared with Q2 2020 the report stated.
There was no FX trading on Wednesday across the markets segment following the 24 hours curfew declared by the Lagos State Government as a result of the EndSARS crisis.
Read also: Volume of dollar sales at I&E forex window falls to $937.27m
However, some BDC operators were able to fund their accounts in expectation of dollar disbursement by the Central bank on Thursday.
“BDCs were able to fund their accounts in three of our centres nationwide namely Abuja, Awka, and kano fully. However a good number have also funded their accounts in Lagos before the announcement of curfew in the state”, Aminu Gwadabe, President, Association of Bureau De Change Operators of Nigeria (ABCON) said.
“We expect full market days in the three centre of Abuja, Awka, and kano tomorrow while we will be watching events as they unfold in Lagos,” Gwadabe told BusinessDay on Wednesday.
The pressure on the foreign exchange market persisted in Q3 2020 owing to a slowdown in the global oil prices and continued pressure on external reserves.
Consequently, in a bid to reduce pressure and unify the foreign exchange market, the Central Bank for the second time in 2020 devalued the Naira on the official window in Q3 2020 to N380/US$ from N361/US$.
The Naira, though, stabilized on the I&E Window, went as high as N395.84/US$ on a mid-day trade. At the end of Q3 2020, the Naira stood at N386/US$ from the opening value of N386.50/US$. As of October 9, 2020, the Naira stood at N385.83/US$.
According to FSDH report much of the instability occurred in the Parallel market. The Naira soared to as high as N486/US$ from the Q3 2020 opening figure of N460/US$ (5.65% change).
The news of CBN resumption of sales of Forex to Bureau De Change caused the Naira to appreciate in the Parallel market to N440/US$. The Central Bank sold about US$400 million on a series of sales, yet the Naira depreciated reversing the appreciation recorded.
At the close of Q3 2020, the Naira stood at N465/US$ in the parallel market (1.09% change) and as of Oct 9, the Naira closed at N457/US$. As of October 16, the exchange rate was N460/US$ in the parallel market.
