Forex

Foreign Education and Healthcare Accounts for Heavy Demand of Dollar in Nigeria

Published

3 years ago

March 28, 2022

The total amount of money spent on education and medical services abroad between 2010 to 2020 is more than Nigeria’s current foreign reserves of $39.51 billion, according to the latest report from the Central Bank of Nigeria (CBN).

The search for greener pastures is not a term new to Nigerians and for many reasons, Nigerians travel from country to country seeking better lives for themselves. However, according to a report by the Central Bank of Nigeria, this search for better lives is facilitating the fall of Nigeria’s local currency in the exchange market.

According to the apex bank’s Balance of Payment report, Nigerians spent a total of $39.66bn on foreign education and healthcare-related services between 2010 and 2020.

The report further broke down the figures to reveal that Nigerian parents/guardians spent $28.65bn on foreign education while Nigerians spent $11.01bn on healthcare services in foreign countries. This is more than Nigeria’s foreign reserves of $39.51 billion.

Investors King observed the implication of this figure in the CBN report titled “A Simple and Factual Explanation of Nigeria’s Exchange Rate Dynamics.”

The value of the US Dollar in Nigeria is determined by the force of demand and supply, and with the number of Nigerians studying abroad, the demand for the U.S Dollar has increased exponentially while supply remained low due to a series of structural issues like weak foreign revenue generation, tough business environment, and poor economic policy.

The report noted that the number of foreign exchange requests received by Nigerian Banks is mostly for Primary and Secondary education from neighbouring countries while revealing that between 1998 and 2018, the number of Nigerians studying abroad increased from 15,000 to 96,702.

Also, the CBN report also disclosed that the demand for the dollar had exceeded its supply by about $18.45bn while also revealing that oil export – which accounts for over 90 percent of Nigeria’s foreign exchange earnings – had fallen from $93.89bn in 2011 to $31.4bn in 2020.

The Naira, has, however, maintained a bit of stability over the past month owing to a number of policies that the CBN has introduced. Although this doesn’t take away the fact that the currency is struggling in the exchange market and one way to curb this or reduce this is for Nigerians to establish commodities in products and services that the rest of the world will be willing to buy, which will, in turn, churn in the supply of dollars into the Nigerian economy.

Up Next

Currency in Circulation Falls by N42.43bn in Two Months

Don't Miss

CBN Lures Exporters to I&E FX Window With N65 Rebate on Every $1 Repatriated

Investors King Contributor

Comments

Naira

Nigerian Naira Falls to N1,641.27 Amid Improved FX Supply

Published

2 days ago

October 12, 2024

Iyanuoluwa Martins

The Naira closed the week weaker against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, October 11 to N1,641.27/$1, as the local currency lost 1.15 per cent at the specialised window, according to data obtained from FMDQ Securities Exchange.

The week’s closing value was down N18.70 compared to N1,622.57/$1 published in the preceding session on Thursday.

There was a surge in turnover recorded on Friday as secondary data showed an aggregate of $616.73 million cleared on record, compared to $145.56 million, a rise of $471.17 million or 323.7 per cent.

This is more than $543.5 million announced by the Central Bank of Nigeria (CBN) announced that it sold to authorised dealer local deposit money banks (DMBs) to reduce observed market volatility driven by high demand for commodity imports and seasoned demand for FX between September 6 and 30, 2024.

The rise in supply could be a result of fresh CBN intervention in the market after it had paused for the past two weeks.

In a different pattern, the local currency closed flat against the Pound Sterling and the Euro in the week’s closing session at the official FX market.

Trading against the British currency, the local currency closed at N2,126.26/£1 while it closed at the rate of N1,772.69/€1 against the Euro.

In the Parallel market, the Naira gained on the American currency as it closed at N1,673.54 to the US Dollar, a rise of 94 Kobo compared to N1,674.48/$1 it closed during the Wednesday trading session.

The Naira strengthened its value against the Pound Sterling in the official market by N3.70 to sell at N2,136.68/£1 compared with the preceding session’s N2,140.38/£1 and followed the same pattern against the Euro as it appreciated N7.54 to quote at N1,830.29/€1 versus the previous day’s rate of N1,837.83/€1.

The local currency also appreciated N8.59 to close at N1,202.47 per Canadian Dollar, compared to Wednesday’s N1,211.06 per CAD.

Naira

Naira Records Marginal Rise on Dollar as Supply Weakens

Published

3 days ago

October 11, 2024

Iyanuoluwa Martins

The Naira exchange rate improved slightly in the official forex market as the Central Bank of Nigeria (CBN) failed to resume the retail Dutch auctions again.

The Naira rose by 0.16 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) to exchange at N1,622.57/$1 on Thursday, October 10 amid a further drop in supply at the official market.

The local currency rose on the greenback by N2.56 versus N1,625.13/$1 which it closed at the previous session on Wednesday.

Demand for foreign currency continues to overshadow FX liquidity, leaping exchange rate movement tight across the markets.

Data showed a decline in supply as the turnover published on the FMDQ Group website stood at $145.56 million. This indicated that the session’s turnover fell by 14.7 percent, indicating an appreciation of $25.04 million compared to the $170.60 million published in the last trading session.

Meanwhile, the Naira witnessed losses against the Pound Sterling and the Euro. The domestic currency made a N41.18 slide on the British currency to wrap the penultimate session at N2,126.26/£1 from N2,085.08/£1 that it sold at the previous session.

In the same trend, against the Euro, the Nigerian currency closed at N1,772.69/€1 versus N1,746.58/€1, indicating an N26.11 depreciation.

In the Parallel market, the Naira closed at N1,674.48 to the US Dollar, a difference of N22.32 compared to N1,652.16 it closed during the Wednesday trading session.

The gap between official and parallel market rates had crossed N120 in the recent past until the Central Bank of Nigeria FX intervention which has brought the gap within N50-N60 on the greenback.

The Naira weakened its value against the Pound Sterling in the official market by N27.19 to sell at N2,140.38/£1 compared with the preceding session’s N2,113.19/£1.

It followed the same route against the Euro as it appreciated N22.57 to quote at N1,837.83/€1 versus the previous day’s rate of N1,815.26/€1.

The local currency also pulled a N4.66 depreciation to close on the Canadian Dollar at N1,211.06 against Wednesday’s N1,206.40 per CAD.

Naira

Naira Gains on Dollar at Black Market, Falls at Official FX Market

Published

5 days ago

October 10, 2024

Iyanuoluwa Martins

The Naira strengthened on the US Dollar at the black market but went the other route in the official market on Wednesday, October 9.

The local currency gained N15.23 from the N1,667.39 it closed in the previous session to settle at N1,652.16 at the black market on Wednesday.

At the Nigerian Autonomous Foreign Exchange Market (NAFEX), the local currency lost N63.37 or 4.1 percent to close at N1,625.13/$1, weaker from N1,561.76/$1 it closed on Tuesday.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $83.08 million or 32.7 percent to $170.60 million from $253.68 million.

The decline in supply comes as the Central Bank of Nigeria (CBN) eased with the latest data indicating that the country is not making enough foreign earnings.

For instance, Foreign Direct Investment into Nigeria in the second quarter of 2024 dropped to $29.83 million, a 65.33 percent drop compared to the $86.03 million recorded in the same period last year.

The development marks the lowest level in the last ten years.

It also reflected in both portfolio investments and foreign currency loans as Nigeria’s foreign portfolio investments for Q2 2024 stood at $1.40 billion, marking a sharp decline of 74.97 percent from $5.60 billion recorded in the preceding quarter, and a 65.3 percent drop compared to the $4.05 billion reported in Q2 2023.

Similarly, foreign loans, which constitute a substantial portion of Nigeria’s capital importation, recorded an inflow of $1.15 billion in Q2 2024, reflecting a 74.98 percent decrease from $4.60 billion in Q1 2024.

However, the Naira strengthened its value against the Pound Sterling in the official market by N46.54 to sell at N2,085.08/£1 compared with the preceding session’s N2,131.62/£1.

It followed the same route against the Euro as it appreciated N42.40 to quote at N1,746.58/€1 versus the previous day’s rate of N1,788.98/€1.

The local currency also recorded a gain on the UK Pound Sterling in the black market, the Naira rose to N2,113.19 an N18.94 gain from N2,132.13 and on the Euro, the Naira pulled an N18.37 appreciation to close at N1,815.26 versus N1,833.63 and added 53 cents on the Canadian Dollar to close at N1,206.40 against Monday’s N1,206.93 per CAD.