By FBNQuest Research
According to the most recent data provided by the CBN’s Quarterly Statistical Bulletin (QSB), the total utilisation of foreign exchange (FX) by various sectors of the economy fell by -11% quarter-on-quarter (QoQ) to US$5.7bn in Q3 2024. However, on a year-on-year (YoY) basis, aggregate sectoral utilisation of FX increased significantly by +72% YoY. The modest decline in Q3 relative to the previous quarter was primarily due to a significant reduction in FX usage for invisible transactions, which decreased by -32% q/q to US$2.2bn. As a result, its share of total FX usage decreased to 39%, down from 51% registered in Q2 2024.
FX utilisation by the financial sector, which typically dominates FX usage within the invisible segment, was the major driver behind the marked QoQ decline. FX utilised for financial services fell by -34% QoQ to almost US$2.0bn.
On the part of forex consumption for merchandise imports, FX usage increased modestly by +10% QoQ to nearly US$3.5bn. Consequently, its contribution to total FX utilised rose to 61%, up from 49%.
FX utilisation by the industrial sector for imported raw materials, machinery, and equipment accounted for 53% of the total merchandise goods, making it the largest forex consumer in this category.
Forex demand for food products, the second-largest category within the merchandise goods segment, increased by 16% QoQ to US$633.6m.
The trend in sectoral utilisation of FX, as illustrated in the chart below, has largely declined since Q1 2023. This pattern can be primarily attributed to decreased demand for FX following the significant devaluation of the Naira.
Looking ahead, we anticipate a modest improvement in FX utilisation by various economic sectors due to increased FX liquidity and improved access to foreign currency resulting from the CBN’s ongoing measures to streamline FX trading and facilitate transparency in the FX market.
