CBN data shows that the demand for dollars dropped by 11% to $5.7 billion in the third quarter of 2024The move shows an 11% decline in dollar demand by various sectors of the Nigerian economyReports say the largest consumer of FX in the review remained manufacturing and food imports
Henzodaily.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Demand for the US greenback declined by 11% to $5.7 billion in Q3 of last year due to a decline in invisible transactions.
The development signals a remarkable drop in the previous quarter as forex uses non-physical transactions dropped by 32% to $2.2 billion.
CBN reports a decline in FX demand by importers and traders in all markets
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Invisible transactions reduce FX demands
Data from the Central Bank of Nigeria shows that invisible transactions now account for 39% of the total FX use from 51% in Q2 of 2024.
The financial sector drove the decline in FX demand during the review period, as the industry’s FX consumption plummeted by 34% per quarter, hitting almost $2.0 billion.
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In contrast, FX demand for merchandise imports increased moderately by 10% per quarter, increasing to almost $3.5 billion.
The increase in physical products took the share of merchandise imports to 61%, from 49% in the previous quarter.
According to a BusinessDay report, demand by various sectors dropped by 11% to $5.7 billion in Q3 2024 due to a reduction in invisible transactions.
The industrial sector drives FX consumption
The CBN data shows that the industrial sector emerged as the largest consumer of FX, accounting for 53% of the total FX used for imported raw materials, machinery, and equipment.
Also, FX demand for food imports rose by 16% per quarter to $633.6 million.
FX inflows by IMTOs surges
A previous report by Henzodaily.ng shows that CBN reported a 63.7% spike in inflows via IMTOs in the first three quarters of last year.
CBN’s latest quarterly bulletin disclosed that inflows increased from $2.33 billion in 2023 to $3.82 billion in 2024.
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The surge has been attributed to several reforms introduced by the CBN under Olayemi Cardoso.
Yearly analysis of the data shows a consistent rise in monthly remittance inflows throughout the year.
CBN’s new policy helps naira’s value to rise by over N100
Meanwhile, Henzodaily.ng reported that the Nigerian naira has seen a notable recovery, appreciating by N125 against the US dollar within a month of the official launch of the Electronic Foreign Exchange Matching System (EFEMS).
Data from the Central Bank of Nigeria (CBN) revealed that the naira has strengthened by 8% or N125 since the day the EFEMS system became operational.
At the EFEM launch on December 2, 2023, the dollar was quoted at N1,660 in the official market.
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Source: Henzodaily.ng