Foreign exchange inflows through the Investors and Exporters Foreign Exchange Window (I&E Window), also known as the Nigeria Autonomous Foreign Exchange (NAFEX) window, has seen an inflow of $41.97 billion since its inception in April last year. Analysts and players in the market said they expect the inflow to remain steady as political activities commence.
The NAFEX was introduced by the Central Bank of Nigeria (CBN) in the height of the foreign exchange crisis as a way to increase forex inflow and help converge rates. Seen as one of the successes of the CBN, the I&E window, according to analyst and traders in the forex market, has brought more transparency to the market, which uses a market determined rate. This year alone, the I&E window has seen close to $15 billion inflow as weekly average trade on the window has been around $1 billion in recent times.
According to the chief executive and managing director of Cowry Assets Management Ltd, Johnson Chukwu, the rising level of the foreign reserves of the country is also a contributory factor to the growing confidence in the country that has led to the steady inflow of forex on the window. The external reserves of the country has so far risen to $46 billion according to figures given by the CBN earlier in the week.
Data released by the Financial Market Dealers Quotations (FMDQ) show that the total value traded at the I&E forex window in January 2018 settled at $5.25 billion, an increase of 36.87 per cent or $1.41 billion compared to the $3.87 billion value recorded in December 2017.
The inflow, however, dropped in February by 25.71 per cent or $3.90 billion, bringing the total value traded at the Window in the first two months to $9.15 billion.
Chukwu noted that the inflows through the I&E window is expected to maintain the tempo through the second and early parts of the third quarter.
“We expect that as political activities kick off in earnest, investors will begin to be moderate in their investments as it happens in every country,” he said.
The FMDQ data showed that foreign exchange transaction inflows into the country settled at $14.01 billion in January 2018, an increase of 8.91 per cent when compared with the $12.86 billion value recorded in December 2017. The transactions however decreased by 7.78 per cent in February to $12.92 billion.
FMDQ noted that Inter-member trades recorded an increase of 11.67 per cent over the December figure of $0.99 billion to $1.10 billion in January 2018, while Member-CBN trades recorded $4.18 billion in January 2018, representing an increase of 17.98 and 57.58 per cents month on month and year on year respectively, a likely effect of the Secondary Market Intervention Sales (SMIS) introduced by the CBN in February 2017.
In February, Inter-member trades rose to $1.36 billion, while Member-CBN trades dropped to $4.11 as the effect of the Secondary Market Intervention Sales (SMIS) continued to boost activity in the FX markets.
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