Nigeria’s Central Bank recently disclosed that it sold a historic amount of US Dollars in the previous month. The Apex Bank admitted that so far in the year it sold the most Dollars in May, albeit with very little overall market turnover in May. For context, the amount of Dollars sold in March and April combined does not equal the amount sold in May.
As reported by Business Day, according to data obtained from the FMDQ Securities Exchange. the Central Bank of Nigeria sold $575m in May which exceeds February’s $392 million, March’s $189m, and April’s $151m in April. Regardless, the CBN’s sales barely contributed 6.6% of overall market turnover in May.
Foreign investors are becoming more wary of Nigeria’s foreign currency market due to the country’s persistent inflation and unstable exchange rate. In addition, repatriation risks are a worry for foreign investors, who would rather travel to Egypt, Turkey, or Pakistan than Nigeria.
According to FMDQ data, the turnover for the first 30 days of May was 35% lower than the $9.12 billion exchanged in April and 53% lower than the $12.6 billion transacted in March.
Tellimer Ltd. statistics revealed that investor inflows into the currency market dropped by over 20% in April to a daily average of $200 million, then dropped even lower to $180 million in the first three weeks of May.
Foreign portfolio inflows into the stock market were N42.58 billion in April, down from N52.66 billion in March.
The currency is expected to stabilize between N1350 to N1450 in the next 12 months, according to the Chief executive officer of Lagos-based consulting firm, Financial Derivatives Company. Bismarck Rewane.
