Reserves accumulation via another window

Today’s chart shows the monthly inflows and outflows of fx through the CBN over the past year. The data series in the CBN’s Quarterly Statistical Bulletin shows the same for autonomous (ie non-CBN) sources. The split for total inflows is roughly 40% CBN and 60% autonomous, and for total outflows a very different 90% CBN and 10% autonomous. The autonomous inflows are mostly over-the-counter purchases, which, in turn, are largely capital importations. This last category would cover the offshore portfolio community.

A striking trend in the chart is the strong increase in CBN inflows over the six months to September. The total rose by US$3.06bn over this period, consisting of US$830m from oil and US$2.23bn from non-oil sources. The first is consistent with the recovery in oil production/decrease in sabotage, and the second with the improvement in fx liquidity as a result of the opening of new fx windows.

This sharp increase in CBN (and autonomous) inflows has enabled the central bank to channel fx into the economy through an acceleration in its sales to the interbank market (forward and spot) and the bureaux de change.

The net flow has been transformed over the six-month period: from –US$330m (negative) in March to US$2.04bn in September for the CBN, and from US$3.09bn to US$5.09bn for autonomous transactions. The net flow would have gathered momentum in the intervening period.

Reserves accumulation via another window - FBNQuest Research

The data series has some welcome surprises such as lines for swaps, recovered funds (none this year), cash-call payments to the oil joint-ventures and external debt service. There are some matching disappointments. These include the absence of entries this year for proceeds of Eurobond sales.

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