The pivotal role of FPIs (again)

Our chart today captures the net fx flows through the CBN for three successive 12-month periods through to October, the last month for which the data are available. It does not capture the flows through autonomous (other) sources. In 2015/16 inflows through the CBN and from autonomous sources were generally weak as a result of faltering oil production and soft crude prices. In this period the CBN was struggling to meet fx demand from manufacturers, airlines and business travellers, resulting in the pipeline of arrears, and leading to the opening of new fx windows.


  • At the beginning of 2016/17 there were net fx inflows as the CBN’s unofficial rationing of fx became acute. Once the windows were opened, the net inflows actually diminished as CBN outflows picked up against the background of rising autonomous inflows from foreign portfolio investors (FPIs).
  • In 2017/18 those inflows remained healthy through to May/June when some FPIs began to have second thoughts due to monetary policy normalization in the US. The same narrative can be told through the balance-of-payments and the data for reserves.
  • Autonomous inflows amounted to US$2.19bn in October 2016, US$5.10bn in October 2017 and US$4.64bn in October 2018.
  • We can also see this trend in the data for the aggregate net inflow through the economy (CBN and autonomous sources combined): US$3.26bn in October 2018, compared with US$3.09bn the previous month and US$5.89bn in October 2017.

Sources: CBN; FBNQuest Capital Research


  • The third factor to highlight is the contribution of Eurobond issues to CBN inflows. This was highly visible in November 2017, which saw the largest net inflow in the period under review. The data for November 2018 should also show a significant boost.

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