ActivitIES at the Investors & Exporters (I&E) window advanced by 55.7 per cent to $1.9 billion last week, a report by Afrinvest West Africa, has shown.
The figure is an improvement on the $1.2 billion recorded in the previous week.
Before the introduction of the forex window, which allows foreign investors to sell dollars at rates of their choice, provided they can find buyers, the local equities market and the foreign exchange (forex) market were in a shambles.
The All Share Index (ALSI) was shrinking and the naira weakened against other currencies, especially the dollar.
The I&E window has become the attraction, making many of the business concerns to take another look at their exit from the country.
The introduction of the window was followed by continuous interventions by the CBN which enabled banks and BDC operators to meet forex demand at the retail end of the market. Thus, the window has become a life-saving pill for the domestic economy as it has attracted about $60 billion into the market, enhanced transparency and made forex available to the end-users.
The operations of companies, especially manufacturing, has been on the upward swing with an improvement in inflation figures as well as equities market performance.
According to the CBN, the “Investors’ & Exporters’ FX Window” is boosting liquidity in the forex market and ensuring timely execution and settlement for eligible transactions by all parties.
Before the stability in the forex market and naira, the economy witnessed a depressed Gross Domestic Product (GDP) growth, which culminated in a recession in 2016.
“There was also rising inflation, which peaked at almost 19 per cent in January 2017 and a persistently rising unemployment rate to 14.23 per cent in 2016 fourth quarter from 6.41 per cent as at 2014 fourth quarter.
There was also a significant depreciation of the exchange rate, reaching N525 to $1 in February 2017 and witnessed a fast depletion of the reserves which was drained down from about $23.6 billion in October 2016 from as high as $40 billion in January 2014.
it said: “The I&E Forex window, seen as a ‘willing buyer, willing-seller window’, allows foreign investors to bring in dollars into the economy at any price of their choice, provided they could find buyers at such rate. The figure at the window has also impacted positively on the Purchasing Managers’ Index (PMI).”
Managing Director Financial Derivatives Company Limited Bismarck Rewane, described the I&E forex window as the best policy implemented by the CBN.
Managing Director, Afrinvest West Africa PlcIke Chioke said the window has won the confidence of foreign investors. He said the window attracted foreign investors’ appetite for Nigerian assets leading to impressive appreciation in the equities market and stabilising the naira.
Before the introduction of the window, foreign investors’ appetite for local assets waned significantly on the back of currency crisis which in turn fundamentally weakened macroeconomic performance, dragged corporate earnings and also impacted on equities market viability.