Forex Inflows Surge by 245.9%, What’s Behind This Staggering Growth?

According to the Central Bank of Nigeria (CBN) economic report, the country's foreign exchange inflows have notably increased over the past year. In November 2023, the foreign exchange inflows were $1.7 billion, whereas this figure surged to $5.95 billion in November 2024, reflecting strong momentum in foreign exchange inflows.

However, on a monthly basis, the net foreign exchange inflows in November 2024 slightly decreased compared to October due to reduced foreign exchange inflows through banking channels. In October 2024, Nigeria's net foreign exchange inflows were $4.86 billion, whereas in November, it rose to $5.95 billion. Meanwhile, total foreign exchange inflows decreased from $9.15 billion in October to $8.4 billion in November. Notably, foreign exchange outflows also saw a significant decline, dropping from $4.29 billion to $2.45 billion.

During this period, the Naira depreciated against the US dollar. Additionally, the average foreign exchange turnover on the Nigerian Financial Foreign Exchange Market (NFEM) increased by 24.78% from $241.65 million in October 2024 to $301.52 million in November.

Net Foreign Exchange Flow Explained

Net foreign exchange flow refers to the difference between the total amount of foreign exchange flowing into a country or economy and the total amount flowing out within a given period. It reflects the movement of capital in the foreign exchange market of that economy. Specifically, when net foreign exchange flow is positive, it means the foreign exchange inflows into the economy exceed the outflows, indicating that the country's foreign exchange reserves are being replenished and there is a healthy inflow of capital.