The monetary policy interventions by the country’s financial system regulatory authority has triggered a quadruple impact on the economy, as the Central Bank of Nigeria (CBN) on Thursday reported a significant increase in foreign exchange inflow into the country in February 2024.
The apex bank said in a statement by the Acting Director of Corporate Communications, Hakama Sidi-Ali, that a review of its data revealed four-folds increments in the foreign remittance payments by Nigerians overseas as well as purchases of Naira assets by foreign portfolio investors interested in doing business in Nigeria.
“The Bank’s data indicates that overseas remittances rose to $1.3 billion in February 2024, more than four times the $300 million received in January,” Sidi Ali said.
“Foreign investors purchased more than $1 billion of Nigerian assets last month (February), with total portfolio flows of at least $2.3 billion recorded thus far in 2024, compared to $3.9 billion seen in total for last year,” she added.
Sidi-Ali said higher foreign exchange inflows has continued in March 2024, driven by increased investor interest in short-term sovereign debt management intervention, following the recent adjustment to the controlling monetary policy benchmark interest rates by the CBN.
At the end of the recent Monetary Policy Committee (MPC) meeting in Abuja, the monetary policy rate (MPR), also known as the lending rate, was raised by 400 basis points to 22.75 percent, from 18.75 percent and the asymmetric corridor around the MPR adjusted to +100/-700 from +100/-300 basis points.
Also, the Committee raised the Cash Reserve Ratio (CRR) from 32.5 percent to 45.0 percent, while retaining the Liquidity Ratio at 30 percent.
The Committee said the decision to hike the MPR was to offset the pers-
isting inflationary pressures on the economy .
Early this week, the CBN spokesperson said the issuance of government securities was significantly oversubscribed, with foreign investors accounting for over 75 percent of bids received at the auctions conducted on March 1 and 6, 2024.
She recalled the CBN Governor, Olayemi Cardoso’s detailed strategy set out during last month’s MPC meeting to curb spiralling inflation, stabilise the exchange rate, and spur confidence in the banking system and economy.
This, she said, was followed by a conference call with foreign portfolio investors to set government expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.
“All the different measures we have taken to boost reserves and create more liquidity in the markets have started to pay off,” Sidi-Ali quoted Cardoso as saying.
“When people understand the real issues and see a strategy and a plan, things tend to calm down. Our objective today is to ensure the market has adequate supply; that the market functions, and that investors can come in and go out freely without any hindrances,” the CBN governor added.
