The demand for foreign exchange in Nigeria experienced a slight decline in the third quarter of 2024, primarily driven by a significant drop in invisible transactions, according to the latest Quarterly Statistical Bulletin published by the Central Bank of Nigeria (CBN).
Invisible transactions, which include payments for services such as education, medical treatment, and travel, saw a 32 percent quarter-on-quarter decline, contributing to an overall 11 percent decrease in total foreign exchange utilization.
“FX utilised for financial services fell by 34 per cent QoQ to almost $2.0bn,” stated FBNQuest, a leading financial services firm, in its analysis of the report.
Conversely, foreign exchange utilization for merchandise imports increased by 10 percent quarter-on-quarter, driven by rising demand for raw materials, machinery, and equipment for the industrial sector.
The CBN has been implementing various reforms to increase foreign exchange liquidity, including the 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,” concluded the FBNQuest report.
This analysis highlights the evolving dynamics of foreign exchange demand in the Nigerian economy and the impact of recent policy measures implemented by the CBN.
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