CBN Report: Nigeria’s Net Forex Declines by 2.97% in Q3 2024

The Central Bank of Nigeria (CBN) has revealed that the net foreign exchange inflow into the Nigerian economy dropped by 2.97 percent in the third quarter of 2024, declining to $14.46 billion from $14.89 billion recorded in the preceding quarter. This was disclosed in the bank’s third-quarter economic report, published on Friday.

Despite the quarter-on-quarter dip, the report highlighted a significant year-on-year improvement, with net foreign inflow increasing by 75.91 percent compared to $8.22 billion in Q3 2023. The report attributed this improvement to various structural and policy adjustments.

“Inflows through the bank rose by 39.63 percent to $11.86 billion from $8.49 billion, while autonomous sources declined by 19.66 percent to $11.03 billion from $13.72 billion in the preceding quarter,” the report stated.

However, foreign exchange outflows increased significantly, rising by 15.18 percent to $8.43 billion compared to the Q2 figure. The report noted, “Outflows through the bank rose by 27.91 percent to $7.31 billion, while those through autonomous sources decreased by 30.06 percent to $1.12 billion.”

Diaspora Remittances Surge

On diaspora remittances, CBN Governor Olayemi Cardoso disclosed during a recent Senate meeting that remittances processed through International Money Transfer Operators (IMTOs) between January and October 2024 reached $4.22 billion, nearly double the $2.62 billion recorded during the same period in 2023.

Cardoso attributed the growth to improved remittance efficiency, trust among Nigerians in the diaspora, and favorable economic policies.

“On a monthly basis, remittances increased from $336 million in September 2024 to $402 million in October 2024,” he stated.

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Exchange Rate and Reserves

The average exchange rate at the Nigerian Autonomous Foreign Exchange Market depreciated by 14.62 percent in Q3 2024 to N1,588.64/$1, from N1,385.96/$1 in Q2. The depreciation was linked to heightened demand pressure.

External reserves rose significantly during the period, reaching $39.29 billion at the end of September 2024, up from $34.76 billion in the previous quarter. According to the CBN, this level of reserves could cover 8.91 months of imports for goods and services or 13.34 months for goods only.

Inflation and Economic Outlook

Nigeria’s inflation rate climbed to 34.60 percent in November 2024, driven by rising food and energy costs. This marks a 0.72 percent increase from October’s rate of 33.88 percent. The CBN’s report projected that inflation would remain elevated for the rest of 2024, citing ongoing policy reforms and rising energy and transport costs. However, it noted that “the relative stability in the foreign exchange market and sustained food harvests may moderate inflationary pressures.”

The bank’s outlook for the external sector remains optimistic, driven by expectations of improved trade surpluses, higher crude oil production, and the full operation of domestic refineries.

“Fiscal outlook remains bright in the near- to medium-term, as fiscal reforms continue to exert favourable outcomes, evident in contracting fiscal deficits and higher revenue collection. The volatility in global crude oil prices, coupled with low production vis-à-vis the OPEC quota, are, however, risks to the outlook.” the report warned.