Net foreign exchange (FX) inflow into the economy fell sharply by 54 per cent, year-on-year, YoY to $7.29 billion in the first half of the year, H1’23, from $15.86 billion in the corresponding period in 2022.
The sharp decline which mirrors the acute dollar shortage plaguing the FX market, was driven by net FX outflow of $1.69 billion recorded by the Central Bank of Nigeria, CBN, in H1’23.
Details of the CBN’s Statistical Bulletin for June 2023 showed that FX inflow into the economy fell by 55 per cent, YoY to $17.17 billion in H1’23 from $37.88 billion recorded in H1’22.
Similarly, FX, outflow fell 55 percent YoY to $9.89 billion in H1’23 from $22.02 billion in H1’22.
As a result, net FX inflow fell by 54 per cent, YoY, to $7.29 billion in H1’23 from $15.86 billion in the corresponding period in 2022.
Foreign exchange inflow through the autonomous sources also fell 54 per cent to $10 billion in H1’23 from $21.7 billion in H1’22.
FX outflow through the autonomous sources fell by 80 per cent YoY to $1.03 billion in H1’23 from $5.13 billion in H1’22.
Consequently, net FX inflow through autonomous sources fell by 45 per cent YoY to $8.97 billion in H1’23 from $16.34 billion in H1’22.
Further analysis showed that Foreign exchange inflow through the CBN fell by 56 per cent to $7.17 billion in H1’23 from $16.4 billion in H1’22.
Also, foreign exchange outflow through the apex bank fell by 48 per cent to $8.86 billion in H1’23 from $16.89 billion in H1’22.
Consequently, the CBN recorded net foreign exchange outflow of $1.69 billion in H1’23, representing 245 per cent deterioration from the $490 million net foreign exchange outflow it recorded in H1’22.
External reserves shed $3.75bn
Reflecting the impact of the sharp decline in net foreign exchange inflow, the nation’s external reserves fell by 10 per cent ($3.756 billion) in 10 months to $33.326 billion on Thursday, October 26 from $37.082 on December 31st 2022.
According to the CBN, the external reserves fell in H1’23 by $2.96 billion to $34.326 billion from $37.082 on December 31st 2022.
In H2’23, the reserves have fallen so far by $793 million to $33.326 billion.
Speaking to the issue of FX flows in the economy, Head of Strategy, Securities and Exchange Commission, Momodu Omamegbe, said: “Foreign exchange inflows remain limited and the Nigerian Upstream Petroleum Regulatory Commission reported that total crude oil production, both blended and unblended including condensates recorded a moderate increase of 1.47 mbpd in June 2023.
This bodes well for our foreign exchange reserves but production increase should be consistent and sustained. Increasing crude oil production and consequently revenues is critical to improving our foreign exchange liquidity position in the short to medium term. This will no doubt positively impact our foreign exchange reserves with important exchange rate implications.”