Hot money inflows in Nigeria near six-year high
Foreign portfolio investment, also known as hot money, rose last month to the highest in nearly six years as the Central Bank of Nigeria (CBN) stepped up efforts to revive confidence in the economy.
The CBN has taken a series of measures including clearing foreign exchange backlog and raising interest rates to lure back investors into the country.
The stock market saw an inflow of N52.66 billion from foreign investors last month, the highest monthly figure since May 2018, according to data compiled by Markets Reporters from the Nigerian Exchange Limited. That compares with the N24.93 billion injected into the market in February.
Foreign investors bought more stocks than they sold last month for the first time in 10 months, with a net inflow of N11.06 billion, the NGX data show.
“The increase in liquidity and greater involvement of foreign portfolio investors during the first quarter of 2024 can be attributed to the actions taken by the CBN governor to address the backlog of foreign exchange (FX) transactions and rebuild trust in the market,” analysts at CSL Stockbrokers said in a note on Tuesday.
They described the CBN efforts as praiseworthy, saying the actions of monetary authorities must be accompanied by complementary measures on the fiscal front.
“This crucial to ensure a lasting improvement in FX supply, leading to the accumulation of reserves and a sustained boost in market liquidity,” they added.
