LAGOS, Nigeria (VOICE OF NAIJA) – The Nigeria’s forex market has attracted $823 million from foreign investors through the Nigeria Autonomous Foreign Exchange Market (NAFEM).
The influx of capital comes as part of ongoing efforts by the apex bank to attract foreign exchange.
The NAFEM serves as a pivotal trading segment for investors, exporters, and end-users, facilitating forex transactions at exchange rates determined by prevailing market conditions.
Established by the CBN via a circular dated April 21, 2017, NAFEM ensures efficient price discovery in the forex market.
A recent report by Afrinvest West Africa Limited revealed that the $823 million influx represents year-to-date net inflows through the NAFEM window, underscoring the success of the CBN’s initiatives to lure foreign exchange.
Despite the challenges posed by fluctuations in exchange rates, the naira remained stable, trading within a similar band as the previous week.
READ ALSO: Naira Drops Against USD At Forex Market
Analysts at Afrinvest noted that activity levels at the NAFEM Window surged by 41.4 percent, reaching $421.6 million. However, the naira experienced marginal declines against the dollar both at the NAFEM and parallel markets, reflecting the dynamic nature of the forex landscape.
“In response to distortions in the foreign exchange market, including speculation-driven pressure on exchange rates, the Monetary Policy Committee (MPC) deliberated on various reforms during its February meeting,” the report noted.
On his last, the CBN Governor Olayemi Cardoso emphasised the importance of these reforms in achieving stability and fostering transparency in the forex market.
He said: “Key reforms include the unification of the forex market, promotion of a willing buyer-willing seller system, and removal of limits on margins for International Money Transfer Operators remittances.
“Additionally, the introduction of a two-way quote system and broad reforms in the Bureaux de Change segment aim to restore stability and enhance supply in the forex market.”
Adding that to attract foreign capital, the apex bank raised yields on Treasury Bills (T-Bills), prompting investors to shift their focus from bonds to T-Bills, the report noted that this strategic move led to sell-offs in the bonds market, with investors seeking higher returns through T-Bills and Savings bonds.
“As Nigeria navigates through economic challenges, the influx of foreign investment signals growing confidence in the nation’s economic prospects. With ongoing reforms and proactive measures, stakeholders remain optimistic about achieving sustained growth and stability in the forex market,” it noted