Forex inflow through CBN declines to $6.97bn in Q3 2020

Forex inflow through CBN declines to $6.97bn Q3 2020

Foreign exchange inflow through the Central Bank of Nigeria (CBN) in the third quarter of 2020 stood at $6.97 billion.

The CBN disclosed this in the third quarter economic report.

It said, “Foreign exchange inflow through the Central Bank of Nigeria decreased in the third quarter of 2020, largely due to a reduction in non-oil inflow.

“During the review period, aggregate foreign exchange inflow through the CBN stood at $6.97bn, a decrease of 30.7 per cent and 43.6 per cent below the levels in the second quarter of 2020 and the corresponding quarter of 2019, respectively.

“The development was attributed to a decline in both oil and non-oil receipts by 9.7 per cent and 44.7 per cent, respectively, below the levels in the preceding quarter and corresponding quarter of 2019.”

The CBN said the decrease in non-oil receipts followed reversion to normal trend after the one-off IMF facility in the previous quarter, while that of oil receipts was as a result of the weak global demand for crude oil, owing to fragile global economic recovery.

Disaggregation of inflow through the bank indicated that oil and non-oil receipts were $2.35bn and $4.62bn, respectively.

Further analysis of non-oil receipts showed that interbank swaps, other official receipts, and TSA and third-party receipts increased by 255.6 per cent, 40.4 per cent and 6.8 per cent to $1.60bn, $0.99bn and $0.95bn over their respective levels in the second quarter of 2020.

However, foreign exchange purchases, Deposit Money Bank cash receipts and unutilised IMTO funds declined by 14.9 per cent, 68.1 per cent and 11.5 per cent to $0.56bn, $0.10bn and $0.24bn, below the levels in the preceding quarter, respectively.

Unutilised funds from FX transactions, returned payments and interest on reserves and investments fell to $0.09bn, $0.02bn and $0.06bn, respectively, below the levels in the preceding quarter.

Aggregate foreign exchange outflow through the CBN declined by 12.6 per cent, from $7.95bn in the second quarter of 2020 to $6.95bn in the third quarter of 2020.

The decline was due to the lull in economic activities arising from the COVID-19 lockdown and subsequent reduction in foreign exchange needs by the private and public sectors.

A breakdown of the outflow through the bank during the review period showed that interbank utilisation was $4.37bn; public sector/direct payments ($0.78bn); third party MDA transfers ($0.9bn); external debt service ($0.51bn); forex special payment ($0.05bn); national priority projects ($0.002bn); and bank and SDR charges/Fees ($0.0001bn).

Other sources of outflow through the bank included drawings on L/Cs and funds returned to remitter amounting to $0.33bn and $0.006bn, respectively, in the review period.