Forex inflow to domiciliary accounts falls 69% in Q2

NEWSMAN, Abuja – Foreign exchange (forex) inflow to domiciliary accounts fell by 69 percent, quarter-on-quarter (q/q) in the second quarter of the year (Q2’2020) amidst acute dollar scarcity during the quarter.

A domiciliary account is a type of current account that allows you to fund it with foreign currencies and enables you to do foreign transactions on that account. The account could be used to transfer money to another country or receive foreign currency from another country.

According to data in the Central Bank of Nigeria (CBN) statistical bulletin, shows that forex inflow fell to $3.492 billion in Q2’2020 from $11.26 billion in the Q1’2020.

But for the first half of the year (H1’2020) forex inflow into domiciliary account deposits rose 85 percent to $14.75 billion from $7.99 billion in the corresponding period of 2019, H1’19, Vanguard reported.

Banking sources attributed the sharp decline in Q2’2020 to the scarcity of dollars during the quarter. The scarcity was triggered by the suspension of dollar sales to BDCs by the CBN, which resulted to N73 gap between the parallel market exchange rate and the official exchange rate.

In addition, was the apprehension generated by a new CBN rule on February 20th 2020, which limited online transfers out of domiciliary accounts. The new CBN rule stated, “Only transfers into domiciliary accounts can be transferred from such accounts while cash deposit into such accounts can only be withdrawn in cash”.

Meanwhile, the volume of dollars traded (turnover) in the Investors and Exporters (I&E) window of the Nigerian foreign exchange market fell   by 14 percent, month-on-month, to $1.7 billion in October from $1.98 billion in September 2020. Weekly turnover in the window showed that $102.02 million was traded in the first week of October.   Turnover rose by 355 percent to $464.06 million in the second week but dropped 27 percent to $336.81 million in the third week, before rising 24 percent to $418.35 million in the fourth week. It further rose 11 percent to $463.62 million in the fifth week.  

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