Nigeria’s foreign exchange inflows decreased by 2.97% in the third quarter of 2024, totaling $14.46 billion, down from $14.89 billion in the second quarter.
This data was revealed in the Central Bank of Nigeria’s third-quarter economic report released on Friday.
Despite the quarter-on-quarter decline, foreign exchange inflows showed significant improvement compared to the same period in 2023, rising by 75.91% from $8.22 billion to $14.46 billion.
Total foreign exchange inflows in Q3 2024 increased by 3.01%, reaching $22.89 billion, compared to $22.22 billion in Q2.
The report noted that official inflows saw a rise, while autonomous sources experienced a decline.
The Central Bank report highlighted that inflows through the banking sector surged by 39.63%, rising to $11.86 billion from $8.49 billion.
Conversely, autonomous sources dropped by 19.66%, falling from $13.72 billion to $11.03 billion.
Foreign exchange outflows also increased by 15.18%, reaching $8.43 billion in Q3. Outflows through the banking sector rose by 27.91%, totaling $7.31 billion, while autonomous outflows decreased by 30.06%, dropping to $1.12 billion.
As a result, net foreign exchange inflow for the quarter fell by 2.97%, from $14.89 billion to $14.46 billion.
However, net inflow through autonomous sources declined to $9.90 billion from $12.12 billion, while the banking sector saw a net inflow of $4.55 billion, reversing a net outflow of $2.78 billion from the previous quarter.
During a meeting with the Senate Committee on Banking, Insurance, and Other Financial Institutions, the Governor of the Central Bank of Nigeria, Olayemi Cardoso, disclosed that Nigeria’s diaspora remittances, processed through International Money Transfer Operators, reached $4.22 billion between January and October 2024.
This figure is nearly double the $2.62 billion recorded during the same period in 2023.
Cardoso attributed the surge in remittances to improvements in the remittance system, the favorable impact of President Bola Tinubu’s policies, and growing trust among Nigerians in the diaspora to contribute to national development.
On a monthly basis, remittances rose from $336 million in September 2024 to $402 million in October 2024.
The average exchange rate at the Nigerian Autonomous Foreign Exchange Market depreciated by 14.62% in Q3 2024, settling at N1,588.64/$, compared to N1,385.96/$ in Q2, largely due to increased demand pressure.
Meanwhile, Nigeria’s external reserves grew to $39.29 billion by the end of September 2024, up from $34.76 billion, providing coverage for 8.91 months of imports for goods and services, or 13.34 months for goods alone.
The Central Bank’s projections for the remaining months of 2024 suggest that inflation will likely remain elevated, largely due to ongoing policy reforms impacting energy and transport costs.
However, the contractionary monetary policy, relative stability in the foreign exchange market, and improved harvests of certain food staples could help moderate inflation.
The fiscal outlook remains positive, supported by continued fiscal reforms, lower deficits, and higher revenue collections.
However, risks to the outlook include volatility in global crude oil prices and Nigeria’s low oil production relative to its OPEC quota.
The external sector is expected to remain robust in 2024, driven by a stronger trade surplus, increased domestic crude oil production, and the full operation of the Dangote and Port Harcourt refineries. Favorable global economic conditions, including easing inflation in advanced economies, are expected to support trade and investment.
As of November 2024, Nigeria’s inflation rate stood at 34.60%, driven by rising food and energy costs, marking a 0.72% increase from October’s rate of 33.88%.
While forecasts for December inflation vary, it is unlikely to reach the 21.4% figure projected by the Central Bank in its 2024 macroeconomic outlook.
