According to analysts, the Nigerian Foreign Exchange Market’s (NFEM) overall liquidity growth may be constrained by a significant drop in inflows from local sources and the ongoing uncertainty surrounding global trade, which poses a downside risk to foreign exchange inflows from Foreign Portfolio Investors (FPIs).
They warned that local inflows fell to a four-month low, falling 61.4% m/m to USD2.11 billion (May: USD5.48 billion), after declines in inflows for individuals (-91.6% m/m), CBN (-77.2% m/m), exporters/importers (-74.4% m/m), and non-bank corporates (-17.6% m/m). parts
According to their assertion, the persistent uncertainties surrounding global trade continue to pose a risk to strong inflows from foreign counterparts, which could limit the expansion of total forex liquidity.
The Nigerian Foreign Exchange Market (NFEM) had a 28.1% monthly fall in overall inflows to USD4.84 billion in June (May: USD6.74 billion), according to data from FMDQ.
The drop in inflows from local sources, which accounted for 43.7% of total inflows, was the main cause of the outturn.
Following drops in inflows throughout the individual (-91.6% m/m), CBN (-77.2% m/m), exporters/importers (-74.4% m/m), and non-bank corporates (-17.6% m/m) sectors, inflows from local sources fell to a four-month low, falling by 61.4% m/m to USD2.11 billion (May: USD5.48 billion).
However, due to a reduction in global pressures and a boost in market confidence, inflows from overseas sources (56.3% of total inflows) climbed by 116.8% month over month to USD2.73 billion (May: USD1.26 billion), the highest level in 29 months.
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This led to a larger accretion in the FPI (+133.6% m/m) segment and a reduction in inflows from FDIs (-31.6% m/m) and other corporates (-39.8% m/m).
According to Cordros Securities Researchers’ Weekly Economic and Market Report, inflows from local sources fell to a four-month low, falling by 61.4% m/m to USD2.11 billion (May: USD5.48 billion). This came after declines in inflows across CBN (-77.2% m/m), exporters/importers (-74.4% m/m), individuals (-91.6% m/m), and non-bank corporates (-17.6% m/m).
