The total
turnover of forex transactions on the Investors and Exporters window stood at
US$7.62 billion as at August 11, a report has shown.
The
increase, according to the monthly analysis by FSDH Merchant Bank Limited, has
been consistent since April 2017.
They
projected that the turnover in August 2017 would also be higher than that of
July 2017.
The report
pointed out that the implementation of the Investors’ and Exporters’ Foreign
Exchange (FX) window has increased the supply of foreign exchange into the
Nigerian economy.
In addition,
it has attracted more investments into Nigeria.
“Consequently,
we observed relative stability in the foreign exchange market. Companies and
individuals are now able to access more foreign exchange in the market than
before to carry out eligible transactions and economic activities are gradually
picking up,” they added.
The Central
Bank of Nigeria (CBN) introduced the special window for investors, exporters
and end-users of forex on April 21, 2017 as part of its efforts to deepen the
forex market and accommodate all forex obligations.
According to
the CBN, the objective of the window is to increase liquidity in the forex
market and ensure timely execution and settlement of eligible transactions.
The eligible
transactions in the window are: invisible transactions such as loan repayment,
capital repatriation, management services fees, consultancy fees, software
subscription, technology transfer agreements, personal home remittances and any
other eligible invisible transactions.
Another one
is the Bills for Collection as well as any other trade-related obligations (at
the instance of the customers).
The CBN
stipulates that the supply of foreign currency to the window shall be through
portfolio investors, exporters, authorised dealers and other parties with
foreign currency to exchange to naira.
The CBN is
also a market participant in the window to promote liquidity and professional
market conducts.
“The
introduction of the window has encouraged exporters to bring back their export
proceeds to the country and through the official sources, thus increasing the
stock of foreign exchange in the country. “Another important gain of the window
is that it has attracted more foreign capital into Nigeria for various forms of
investment.
“Our
analysis of the capital importation data from the CBN between January and May,
2017 shows that there was a growth in capital importation in 2017 compared with
2016.
“The total
capital importation in the five months ended May 2017 stood at US$2.09 billion
representing a growth of 82.78% compared with the US$1.42 billion recorded in
the corresponding period of 2016,” it added.
According to
the report, Other Investments (OI) – Loans attracted the highest capital of
US$886 million between January and May in 2017, followed by Foreign Direct
Investment (FDI) – Equity of US$436 million and closely followed by Foreign
Portfolio Investment (FPI) – Equity of US$413 million.
The report
also revealed that capital imported into Nigeria increased significantly from
US$244 million in March to US$563 million in April 2017, following the
commencement of the programme.
The
increased supply of forex led to an appreciation in the value of the naira as
in the parallel market, the value of the naira appreciated by 7.87 per cent
from N396/US$ on April 25, 2017 to N367.50/US$ as at August 11, 2017.
At the
I&E window, the naira gained 2.82% from N374.96/US$ on April 25, 2017 to
N364.78/US$ as at August 11, 2017. In the inter-bank market it also gained 0.1
per cent from N305.9/US$ on April 25, 2017 to N305.65/US$ on August 11, 2017.
“Although we
commend the initiative and note the gains the Nigerian economy recorded since
its implementation, we believe that the gains could be short-lived in the
absence of complementary measures that will improve the competitiveness of the
Nigerian economy.
“There is
the need for concerted efforts to improve physical and human infrastructure in
order to increase local production to meet local consumption and boost exports
to generate diversified foreign exchange earnings,” it stated.
CBN
Governor, Mr. Godwin Emefiele, had told Arise TV that the I & E window was
opened up for more and more people who are interested.
“That was
why we introduced the I & E window. We said if you wanted forex, you can go
to that market and buy it once it fits the pricing structure of the goods or
whatever you want to do.
“And that
has helped to some extent in complementing the flow of forex into the market
and has resulted in the appreciation that we have seen. It is the market that
determines the direction of the exchange rate,” he had said.
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