Total inflow into I&E window rises by 49.1% in September

Total inflows into the Investors and Exporters Window (I&E) window rose to a three-month high in September, increasing by 49.1 per cent month-on-month to $1.31 billion.

In August, the inflow was $881.4 million, according to the data obtained from the FMDQ Securities Exchange.

A breakdown of activities showed that local inflows primarily drove the increase amid a decline in inflows from foreign sources.

Specifically, local inflows increased by 55.2 per cent m/m to $1.26 billion, supported by higher inflows from non-bank corporates (+89.3 per cent m/m) and exporters (+49.7 per cent m/m).

Given that foreign investors remained cautious about returning in droves despite the significant currency depreciation since June, foreign inflows remained underwhelming at (-20.5 per cent m/m to $44.60 million).

Meanwhile, FX Spot and Derivatives markets turnover for the week ended October 6, 2023, was $326.4 million, representing a decrease of 30.91 per cent ($146.05 million) from $472.49 million reported for the week ended September 29, 2023.

According to FMDQ, the week-on-week (w/w) decrease in total turnover was jointly driven by the 30.4 per cent ($142.12 million) and 79.9 per cent ($3.93 million) decreases in FX Spot and FX derivatives turnover.

The w/w decrease in FX derivatives turnover was solely driven by the 79.9 per cent ($3.93 million) decrease in FX Forwards turnover, while there was no activity in both Exchange-Traded FX Futures and Naira-Settled OTC FX Futures markets

In the FX Spot market, the total value of transactions for the week ended October 6, 2023, was $325.45 million, representing a decrease of 30.4 per cent ($142.12 million) from the value of transactions executed in the week ended September 29, 2023 ($467.57 million).

There were no trades executed in the Exchange-Traded FX Futures and extant Naira-Settled OTC FX Futures markets for the week ended October 6, 2023.

Also, the average Nigerian Autonomous Foreign Exchange Fixing (NAFEX) rate was $/₦768.66, compared to $/₦774.01 recorded during the week ended September 29, 2023, representing an appreciation of the Naira against the dollar by 0.70 per cent ($/₦5.35).

Analysts at Cordros Capital predicted weak foreign inflows in the short term as positive reforms aimed at tackling the foreign exchange (forex) crisis slowed down significantly.

“Looking ahead, we expect FX liquidity conditions to remain frail in the near term as FX reform momentum has slowed considerably.

“We also anticipate weak foreign inflows in the short term, as foreign investors will likely adopt a wait-and-see approach in the near term as they await the CBN’s actions in clearing its FX backlogs and the direction of short-term interest rates amid high inflation.”