FX outflows for imports, invisibles jump by 146.15% in May – CBN

Foreign exchange outflow through autonomous sources mainly for imports and invisibles rose significantly by 146.15 percent to $0.32 billion in May 2020, above the level of $0.13 billion in April 2020, because of the partial ease in lockdown restrictions.

The Central Bank of Nigeria (CBN) stated this in its economic report for the month of May released on Tuesday.

However, aggregate foreign exchange outflows from the economy decreased by 23.9 percent to $2.50 billion in May. Outflows through the CBN decreased by 30.9 percent to $2.19 billion, below the level in the preceding month.

With inflow of $5.55 billion and outflow of $2.50 billion, the economy registered a net inflow of $3.02 billion in May 2020, compared with the net inflow of $6.43 billion in the preceding month.

Foreign exchange inflows into the economy fell by 43.2 percent in May 2020. Inflows through the CBN and autonomous sources were negatively impacted. On a month-on-month basis, foreign exchange flows, into the economy declined to $5.52 billion in May 2020.

The decline in inflow, relative to the level in April 2020, was attributed to the lower receipts from oil sources, which fell sharply by 55.2 percent because of the continued fragility in global crude oil demand. Inflow through autonomous sources, particularly invisible purchases, declined by 7.0 percent to $3.51 billion, relative to the preceding month, while there was a 66.2 percent fall in inflow through the CBN, which stood at $2.01 billion in May 2020.

Foreign exchange supply to authorised dealers increased by 18.8 percent to $1.00 billion in May 2020 from $0.84 billion in April 2020, due to rising demand as factories and businesses begin to reopen. Foreign exchange sales at the I&E window increased by 68.4 percent to $0.28 billion, relative to the preceding month’s level of $0.16 billion.

However, interbank sales declined by 10.0 per cent to $0.055 billion, below the $0.062 billion sales in April 2020. In May 2020, sales to BDCS remained suspended as international travels were yet to re-start.

The average turnover at the I&E window fell by 4.9 percent from $0.043 billion in April to $0.041 billion in May 2020; a decrease of 78.8 percent below the level in May 2019. During the month under review, the average exchange rate of the naira at the Interbank segment of the foreign exchange market remained unchanged at N361.00/$, relative to April, 2020.

It, however, depreciated by 15.0 per cent, compared with the corresponding month of 2019. The rate at the I&E window, at N386.25/$, depreciated by 0.3 per cent and 6.6 per cent relative to N384.99/$ in April 2020 and N360.70/$ in May 2019, respectively.

Similarly, at N443.33/$, the naira depreciated by 5.2 percent and 18.9 percent at the BDC segment, relative to N420.15/$ in the preceding month and N359.75/$ in May 2019. Consequently, the interbank/bdc premium widened from 16.4 per cent in the preceding month to 22.8 percent in May 2020. The premium between the BDC/I&E also widened to 14.8 percent from 9.1 percent, in the preceding month.