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Naira remains weak despite $24bn inflow in three months

Naira gains at black market

The naira, Nigeria’s currency remained weak on Wednesday, trading at between N1,498 and N1,505 per dollar at the parallel market, popularly called the black market, despite $24 billion inflows recorded in the first quarter of 2024.

During an interview with Bloomberg on Tuesday, Olayemi Cardoso, governor of the Central Bank of Nigeria (CBN), said the country recorded a total foreign exchange (FX) inflow of $24 billion in three months of 2024.

In one month, precisely June 2024, the Nigerian economy recorded about $5.95 billion inflows from the World Bank and Afreximbank.

Read also: Naira weakens at official market amid Cardoso’s market confidence

Foreign exchange inflows refer to the movement of foreign currency into a country. These inflows can come from various sources, such as exports, when a country sells goods and services to other countries; it earns foreign currency from these transactions.

Foreign Direct Investment (FDI), is another source of inflows and it is about investments made by foreign entities in domestic businesses, such as setting up factories, buying property, or acquiring stakes in local companies. Other sources of FX inflows include remittances, foreign aid, grants and portfolio investment.

Cardoso noted that the foreign exchange inflows for the first quarter of 2024 are approximately 50 percent higher than the inflows recorded in previous quarters up to 2021.

Read also: BDCs struggle with CBN’s recapitalisation rules amidst economic uncertainty

The CBN governor stated that the monetary policy tools used by the apex bank are positively affecting the FX market. “These tools are having a positive impact. Therefore, we believe that by continuing on this path, liquidity will continue to grow,” he said.

The naira depreciated by 0.71 percent as the dollar was quoted at N1,500.79, weaker than N1,490.20 quoted on Monday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), data from the FMDQ Securities Exchange Limited showed.

The local currency had steadied at N1,490 in almost one month following moderation in demand for dollars by the end users.