CLEARING FX BLOG: CBN RELEASE 500MILLION
In its commitment to resolving the backlog of verified foreign exchange transactions, the Central Bank of Nigeria (CBN) announced the release of $500 million across various sectors. Mrs. Hakama Sidi-Ali, the acting director of the Corporate Communications Department at CBN, made this announcement in a statement issued on Monday in Abuja.
As reported by the News Agency of Nigeria (NAN), Sidi-Ali mentioned that this development occurred just a week after the apex bank disbursed around $2.0 billion to fulfill outstanding commitments within the manufacturing, aviation, and petroleum sectors.
She emphasized that the CBN’s management is dedicated to promptly resolving all legitimate foreign exchange backlogs.
She highlighted that the CBN has initiated a comprehensive strategy to enhance liquidity in the Nigerian foreign exchange markets across short, medium, and long-term perspectives.
“As the Governor emphasized, the CBN is dedicated to addressing the fundamental issues that have impeded the effective functioning of the Nigerian FX markets for years,” she stated.
Sidi-Ali explained that the ongoing forex market reforms aim to simplify and unify multiple exchange rates, promote transparency, and diminish arbitrage opportunities.
Expressing confidence in the potential of a stable exchange rate to boost investor confidence and attract foreign investment, she urged all market participants to adhere to established rules. Emphasizing the importance of transparency, she noted that it would facilitate the equitable determination of exchange rates.
Over the last three months, the Central Bank of Nigeria (CBN) has successfully cleared an outstanding sum of nearly $2 billion in overdue foreign exchange forwards. This effort is part of the CBN’s initiative to address the backlog of dollars in Africa’s largest economy, as revealed by Hakama Sidi Ali, the acting director of corporate communications at the apex bank.
Despite these endeavors, persistent forex shortages continue to impact the value of Nigeria’s currency, the naira. With approximately $7 billion in matured forex forwards, a source of concern for investors, the CBN has pledged to make payments to restore confidence in the foreign exchange market.
“In the last three months, the CBN has also settled outstanding forward liabilities, totaling almost USD 2 billion,” Ali stated. “This underscores the Bank’s dedication to resolving pending obligations and ensuring a functional foreign exchange market.”
Ali further disclosed that the CBN has disbursed $61.64 million to foreign airlines facing challenges repatriating funds from Nigeria for tickets sold in the local currency. As of November, the outstanding debt to foreign airlines had surpassed $700 million.
“These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country’s exchange rate,” Ali explained.
The Nigerian FX market has witnessed a sustained decline over the years, leading to over 50% depreciation of the naira after actions taken by the Central Bank of Nigeria (CBN).
In June, the Central Bank of Nigeria (CBN) announced its resolution to streamline all forex exchange windows into the Investors and Exporters (I&E) window.
In an effort to stabilize Nigeria’s unpredictable foreign exchange market and settle outstanding forex liabilities, the Nigerian National Petroleum Corporation Limited (NNPCL) is actively working to secure a $3 billion emergency loan from the Afrexim Bank.
President Bola Tinubu has committed to boosting foreign currency inflows into Nigeria through initiatives such as attracting new investments, augmenting oil production, and implementing reforms in the foreign exchange market.
Source: Techeconomy
