As of August 25, 2024, Nigeria has experienced significant capital outflows, totaling $1 billion in April 2024. This figure marks a 35.14% increase from the $740 million recorded in March, with capital reversals accounting for a staggering 78% of this outflow, amounting to $780 million [f8356443]. Additionally, loan repayments rose to $160 million from $120 million, while dividend repatriation saw a decrease from $90 million to $40 million [f8356443]. This trend of capital outflows peaked at $1.31 billion in February 2024 before beginning to decline [f8356443].
In the context of foreign exchange dynamics, the naira has shown some resilience, appreciating against the U.S. dollar to an average of N1,244.66 per dollar in April, compared to N1,524.04 in March [f8356443]. However, Nigeria's foreign exchange reserves have taken a hit, falling by $2.16 billion over 29 days, reaching a six-year low on April 15, 2024 [f8356443].
This backdrop of capital outflows coincides with the recent strengthening of the naira, which has improved to N1,570.14 per dollar as of August 24, 2024, from N1,586.11 the previous day [e81b19af]. The dollar's decline against other currencies, particularly the British pound, has also influenced these trends, with the dollar trading at a two-year low against the pound [e81b19af].
The Central Bank of Nigeria (CBN) has reported a 30% decrease in foreign exchange transactions in the official market, which fell to $120.20 million [a5c0cdee]. Despite this, FX turnover in the official market saw a rise to $171.79 million, indicating some recovery in market liquidity [c8850386].
The interplay between these capital outflows and the naira's performance is critical as the CBN prepares for a local bond issuance of $500 million, aiming to stabilize the financial landscape amidst ongoing economic reforms [4cab8ea6]. With the International Monetary Fund (IMF) predicting that the exchange rate could fall to ₦2000/$1 by year-end, the market remains cautious as Nigerians consider foreign revenue earning rather than selling dollars [4c0bf14e].
Overall, the current economic climate in Nigeria reflects a complex relationship between capital flows, currency valuation, and foreign investment, necessitating careful monitoring as the situation evolves.