Hope on the Horizon: Nigeria Expects $10 Billion Forex Inflow Within Weeks, as Minister Unveils Presidential Moves to Boost Mark

Mr. Wale Edun, the Minister of Finance and Economic Coordination, has announced the imminent arrival of approximately $10 billion in forex inflows, projecting that this substantial sum will materialize within weeks, as opposed to months. He conveyed this information while participating in a panel session at the ongoing Nigeria Economic Summit, where he fielded questions related to stabilizing the foreign exchange market and enhancing liquidity.

Mr. Edun stated, "Moreover, we anticipate a considerable surge in foreign exchange availability through various means such as NNPC's contributions, amplified production, prudent cost management, forward sales transactions, and productive dialogues with sovereign wealth funds willing to invest and concurrently facilitate foreign exchange availability. This collective effort paints a clear picture of $10 billion worth of foreign exchange arriving in the near future, measured in weeks rather than months."

To address the liquidity issues in the forex market, the Minister emphasized that President Tinubu has executed two executive orders aimed at rectifying the situation. He elucidated, "The President has undertaken measures to alleviate the liquidity constraints in the forex market, which we acknowledge have been a significant challenge of late.

Elaborating further, he noted, "The forex market currently grapples with illiquidity, rendering it ineffective due to inadequate supply, attributable to various factors. The solution proposed by the President involves the signing of an executive order that effectively enables all the funds circulating within the domestic economy to legally integrate into the formal money supply, providing a boost to liquidity."

Additionally, he highlighted, "Furthermore, there is another executive order in place, designed to encourage the issuance of foreign currency instruments within the domestic market. This incentivizes entities to offer foreign exchange from diverse sources, contributing to a more vibrant and liquid forex market."

Background: Since the unification of the foreign exchange market in June, the value of the naira has experienced a dramatic decline of over 100% on the parallel market. Despite the Central Bank's implementation of various measures to infuse liquidity into the market, the disparity between the rates in the Investors and Exporters (I&E) window and the parallel market continues to widen.