According to information collected from the FMDQ, the overall inflows through the Investors and Exporters Window increased to $2.55 billion in the months of May and June.
According to the statistics, once the naira exchange rates were unified, overall inflows into the 1&E window grew for a second consecutive month in June, rising to $1.41 billion from $1.14 billion in May.
According to a breakdown of the statistics, foreign inflow was $298.8 million in June, which was less than expected compared to pre-pandemic levels when the average monthly inflow was $1.56 billion.
Market stability was maintained by local inflows, which reached $1.11 billion in June thanks to stronger inflows from non-bank corporates ($597.10 million) and exporters ($448.00 million).
Commenting on the development, Codros Securities said, “We expect the lingering reforms in the FX market to translate to improvements in FX liquidity conditions over the medium term as market participants’ confidence builds up.
“However, we think foreign investors will likely adopt a wait-and-see approach in the near term as they await the CBN’s actions in clearing its FX backlogs and the direction of short-term interest rates amid high inflation.”
Codros Securities further stated that with international oil companies getting permission from the CBN to resume selling dollars to dealing member banks, FX liquidity in the I&E market would likely improve over the medium term, supporting the local currency.
It added, “On the one hand, we expect the computation changes to improve transparency in the computation of the spot FX rates and provide a clearer picture of the FX rates reflective of the market realities at different times, albeit with increased intraday volatility.
“On the other hand, the IOCs being permitted to sell their USD to dealing members will likely increase FX liquidity in the IEW over the medium term, supporting the local currency.”
Meanwhile, the country’s forex reserve continued to weaken for the seventh consecutive week, falling by $60.27m week-on-week to close at $34.06bn as of July 6, 2023.
The improvement in FX inflows had been attributed to the recent exchange rate unification move of the CBN.
