Demand for the US greenback declined by 11% to $5.7 billion in Q3 of last year due to a decline in invisible transactions.

The development signals a remarkable drop in the previous quarter as forex uses non-physical transactions dropped by 32% to $2.2 billion.

Invisible transactions reduce FX demands

Data from the Central Bank of Nigeria shows that invisible transactions now account for 39% of the total FX use from 51% in Q2 of 2024.

The financial sector drove the decline in FX demand during the review period, as the industry's FX consumption plummeted by 34% per quarter, hitting almost $2.0 billion.

In contrast, FX demand for merchandise imports increased moderately by 10% per quarter, increasing to almost $3.5 billion.

The increase in physical products took the share of merchandise imports to 61%, from 49% in the previous quarter. According to a BusinessDay report, demand by various sectors dropped by 11% to $5.7 billion in Q3 2024 due to a reduction in invisible transactions.

The industrial sector drives FX consumption

The CBN data shows that the industrial sector emerged as the largest consumer of FX, accounting for 53% of the total FX used for imported raw materials, machinery, and equipment.

Also, FX demand for food imports rose by 16% per quarter to $633.6 million.

FX inflows by IMTOs surges

A previous report by Legit.ng shows that CBN reported a 63.7% spike in inflows via IMTOs in the first three quarters of last year. CBN’s latest quarterly bulletin disclosed that inflows increased from $2.33 billion in 2023 to $3.82 billion in 2024.

The surge has been attributed to several reforms introduced by the CBN under Olayemi Cardoso.

Yearly analysis of the data shows a consistent rise in monthly remittance inflows throughout the year.