The Nigerian economy recorded a rise in foreign exchange inflow during the fourth quarter of 2024, according to the latest Central Bank of Nigeria Economic Report.
The report revealed that total foreign exchange inflow rose by 20.62 per cent to $27.81bn, up from $23.06bn in the preceding quarter.
A key highlight of the report was the substantial contribution of autonomous sources to this increase. Inflows from these sources jumped by an impressive 47.55 per cent to $16.27bn, compared to $11.03bn in the third quarter. In contrast, foreign exchange inflow through the CBN declined by 4.05 per cent to $11.54bn from $12.03bn in the previous quarter.
“The economy recorded a higher net foreign exchange inflow, driven largely by inflow through autonomous sources,” read part of the report.
The report also indicated a considerable rise in foreign exchange outflow, which increased by 31.37 per cent to $10.42bn. Outflows through both the CBN ($8.99bn) and autonomous sources ($1.43bn) contributed to this increase, with the latter seeing a particularly sharp rise of 129.59 per cent compared to the previous quarter.
Despite the higher outflows, Nigeria experienced a net positive foreign exchange inflow, which grew by 14.99 per cent to $17.39bn from $15.13bn.
In the period under review, activities on the Nigerian Foreign Exchange Market also painted an interesting picture, as the average turnover at the NFEM witnessed a substantial increase of 75.17 per cent, reaching $296.16m, up from $169.07m in Q3 2024. This surge reflects heightened trading activities in the market.
However, this increased activity coincided with a further weakening of the national currency. The average exchange rate of the naira against the US dollar at the NFEM depreciated by 2.13 per cent, settling at N1,623.26/$, compared to N1,588.64/$ in the third quarter.
The CBN report attributes this depreciation to increased demand pressure in the market.
Meanwhile, the CBN projected that Nigeria’s economy would grow at a faster pace in the medium term.
“The anticipated improvement is hinged on the expected stability of the naira at the foreign exchange market, continued improvement in domestic crude oil production, and the crystallisation of the ongoing policy reforms,” stated the apex bank.
CBN also stated that Nigeria’s inflation is expected to begin to moderate from Q1 2025: “The expected disinflation is hinged on the lagged effect of the Bank’s restrictive policy stance, the relative stability at the foreign exchange market and improved security in food-producing areas.”
Per projection, Nigeria’s inflation figure has dipped for two consecutive months and stood at 23.18 per cent in February. Analysts are projecting a further decline barring shocks.
However, “an unlikely rise in exchange market pressure, increased money supply, hike in PMS price, higher electricity and import tariffs, and escalation of insecurity in food-producing areas are potential downside risks to inflation,” added the bank.
