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Foreign exchange inflows through the Importers and Exporters Foreign Exchange Window (I&E Window) between April 2017 and April 5, 2018, stood at $41.97 billion.
The highest monthly foreign exchange inflows to Nigeria through the I&E window was recorded in January 2018 at $6.04 billion, while the inflows in March 2018 at $5.15 billion was higher than the highest amount recorded in 2017 at $4.53 billion.
In its monthly economic and financial markets outlook, titled, ‘Growth Prospect Improves but Uncertainties Remain,’ research analysts at FSDH Merchant Bank Limited said the rising foreign capital inflows into Nigeria; favourable crude oil price, and increased oil production had led to significant accretion to the external reserves.
The merchant bankers expect inflation rate for March to decline to 13.49 percent on account of base effect of previous year, as it also state that the declining trend in inflation rate may lead to a further drop in the yields on fixed income securities, particularly at the short-end of the yield curve.
Ayodele Akinwunmi, head of research, FSDH Merchant Bank Limited, at the launch of its economic outlook for March, said the 30-day moving average external reserves increased by 8.76 percent to $46.21 billion as of end-March 2018, from $42.49 billion at end-February.
However, FSDH Research noted that the current strategies of the Debt Management Office (DMO) to reduce the interest expense on the debt of the Federal Government of Nigeria (FGN) was working, stating that DMO plans to achieve a debt mix of 60 percent and 40 percent for domestic and external debt, respectively.
It observed a relative increase in the revenue accrued to the FGN from the Federation Account Allocation Committee (FAAC).
These two factors, according to FSDH Research, have led to a drop in the ratio of the interest expense to the FAAC revenue, which stood at 20 percent in December 2017.
On its financial market analysis and outlook, the analysts said they expect a total inflow of about N1.85 trillion to hit the money market from the various maturing government securities and FAAC in the month of March.
“We estimate a total outflow of about N594 billion from the various sources such as government securities and statutory withdrawals, leading to a net inflow of about N1.25 trillion. We expect the market to remain relatively liquid in April. This may necessitate the issuance of Open Market Operations (OMO) to mop-up the liquidity in the system,” Akinwunmi said.
