The Central Bank of Nigeria (CBN) has announced that net foreign exchange inflows into the country surged to $25.4 billion during the first half of 2024, reflecting a 55% increase compared to the same period in the previous year.
This rise has been attributed to the bank’s policy interventions; this development follows the CBN’s recent auction of $876 million to 26 banks to address unmet foreign exchange demands.
According to a statement released by the CBN on Thursday, the growth in foreign exchange inflows has been driven by an increase in capital importation, which reached $6 billion in June 2024, as well as record levels of diaspora remittances through formal channels.
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The CBN stated, “The bank’s policy initiatives are delivering concrete results and strengthening market confidence. Net foreign exchange inflows reached $25.4 billion between January and June, marking a 55% increase year-over-year.”
The statement also highlighted that over the past three weeks, more than $305 million in foreign exchange has been sold to authorized dealers through a two-way quote system, which has been implemented in recent months to improve liquidity in the interbank market.
Additionally, the CBN offered $876 million during an auction on Wednesday, August 7, 2024, using the Retail Dutch Auction System. This system is designed to sell foreign exchange directly to end-users, enhancing market transparency, reducing information gaps, and aiding in price discovery.
The CBN emphasized its ongoing efforts to support the foreign exchange market’s proper functioning by enhancing liquidity when necessary.
The bank also noted that it contributed less than 5% of the $43 billion in foreign exchange turnover recorded in the official market as of July 2024.
The statement concluded that the foreign exchange market is showing signs of improvement and increased depth, with more diverse and robust sources of liquidity contributing to the convergence of exchange rates across various market segments.
The CBN reiterated its commitment to fostering a transparent, market-driven foreign exchange environment and enhancing the market’s ability to meet the needs of all legitimate participants.
Despite these reported improvements, the statement acknowledged that average citizens are still grappling with high inflation and a rising cost of living, even as the CBN, under the leadership of Olayemi Cardoso, has implemented various policies aimed at stabilizing the foreign exchange market and boosting productivity since Cardoso took office last year.
