Forex Outflows Falls by 55% to $3 Billion in April

Bukola Olanrewaju August 20, 2020 BUSINESS Leave a comment

Foreign exchange (forex) outflows has declined by 55 percent to $3 billion from $6.7 billion during the period.

The decline was driven largely, by the 69.3 per cent decline in interbank demand, reflecting substantial decline in Investors and Exporters (I&E) funding in April 2020.

In the same vein, forex inflows into the country’s economy declined by 25 percent in April 2020 to $9.7 billion from $12.9 billion in March 2020. This was due to the weak global demand for oil on account of Coronavirus (COVID’19) Pandemic.

Oil receipts fell sharply by 15.5 percent during the review period due to a 56 percent plunge in average crude oil price to $14.30 per barrel in April from $32.30 per barrel in March.

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The CBN disclosed this in its April Economic Report released yesterday.

The report stated:”The weak global demand on account of COVID-19 led to a 25.0 percent decline in inflow of foreign exchange into the economy in April 2020.

“On a month-on-month basis, foreign exchange inflows, through the economy, declined by 25.0 per cent to $9.72 billion in April 2020. The decline in inflows, relative to the level in March 2020, was attributed to the lower receipts from oil sources, which fell sharply by 15.5 per cent as a result of the plunge in average crude oil price from US$32.30 per barrel in March 2020 to $14.30 per barrel in April 2020. The slump in crude oil price was induced by the weak global demand on account of the lockdown of most economies following the continued spread of COVID- 19.

“Inflow through autonomous sources, particularly invisible purchases, declined by 57.3 per cent to $3.78 billion, relative to the preceding month, but higher than the 44.1 per cent increase in inflows through the CBN, which stood at US$5.94 billion in April 2020.”

On forex outflows it stated: “Following the lockdown of the Nigerian economy, aggregate foreign exchange outflows through the economy decreased by 55.1 per cent to outflows $3.29 billion in April 2020, below the level in the preceding month. The development was driven, largely, by the 69.3 per cent decline in interbank utilisation, reflecting substantial decline in I&E funding and non-intervention in the BDC segment in April 2020.

“Similarly, outflow through autonomous sources, mainly imports and invisibles, declined by 62.2 per cent to $0.13 billion in April 2020, below the level in March 2020. Consequently, a net inflow of $6.43 billion was recorded through the economy in April 2020, compared with the net inflow of $5.63 billion in the preceding month.”