In the first quarter (Q1) of 2023, the Nigerian economy experienced a significant boost in foreign exchange (FX) inflows, according to the Central Bank of Nigeria (CBN).
The inflows rose by 17.5 percent to $17.18 billion, compared to $14.62 billion in the previous quarter. This surge in FX inflows is outlined in the CBN’s monthly economic report for Q3 2023.
The report highlights that the Central Bank received $7.17 billion in FX inflows, marking an increase from $6.21 billion in the preceding quarter.
Additionally, foreign exchange inflows through autonomous sources rose to $10.08 billion, up from $8.41 billion in the previous period. These autonomous sources include revenue from crude oil sales and other government-related channels.
Conversely, foreign exchange outflows from the Nigerian economy also witnessed an increase of 12.8 percent, reaching $9.98 billion in Q1 2023, compared to $8.85 billion in Q4 2022.
Outflows through the CBN rose by 17.9 percent to $8.86 billion, up from $7.51 billion in the preceding quarter. However, autonomous outflows decreased by 16.2 percent to $1.12 billion, down from $1.34 billion in the previous quarter.
The surge in FX inflows is a positive development for the Nigerian economy, as it indicates increased foreign investment and revenue generation.
The rise in inflows through autonomous sources suggests a diversification of revenue streams, reducing the country’s reliance on crude oil sales. The CBN’s role in receiving foreign exchange inflows on behalf of the government highlights its pivotal position in managing the country’s FX reserves.
The increase in outflows through the CBN may be attributed to various factors, including government spending, debt repayments, and import-related transactions. The decrease in autonomous outflows could be a result of measures taken by the government and regulatory bodies to curb capital flight and encourage local investment.
This reduction may also reflect a decline in import demand or a shift towards domestic production.
The Nigerian economy’s foreign exchange inflows experienced a notable increase in Q1 2023, demonstrating positive growth and potential for further economic development.
The rise in inflows through autonomous sources signifies a diversification of revenue streams, while the decrease in autonomous outflows suggests efforts to promote local investment.