Naira Expected to Recover as CBN Releases $500 Million for FX Liability Backlog

Naira Expected to Recover as CBN Releases $500 Million for FX Liability Backlog

  • The Central Bank of Nigeria released another batch of $500 million for forex backlogs
  • The bank stated that the step aligned with its commitment to boost market confidence and attract foreign investment
  • Analysts said the recent move might impact the value of the naira, which was experiencing volatility

Pascal Oparada has over a decade of experience covering Tech, Energy, Stocks, Investments, and Economy.

The Central Bank of Nigeria (CBN) has disbursed another tranche of $500 million across sectors to follow up on its recent payment of about $2 billion to clear outstanding commitments in manufacturing, aviation, and petroleum sectors.

According to CBN’s acting director of Corporate Communications, Hakama Ali, the move aligns with the apex bank’s commitment to addressing the backlog of authenticated foreign exchange transactions.

CBN, Forex backlogs, CBN Governor
Governor of the Central Bank of Nigeria. Olayemi Cardoso Credit: CBN
Source: UGC

Latest action to boost investors' confidence

Read also

Debt, GDP: PwC lists Seven trends that will shape Nigeria’s economy in 2024

Ali assured that CBN’s management is dedicated to settling the transactions swiftly.

Ali said CBN Governor Olayemi Cardoso promised a comprehensive strategy to boost liquidity in the Nigerian foreign exchange markets in the short, medium, and long term.

“As the Governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years,” she added.

Leadership reports that the CBN spokesperson said the forex market reforms aim to simplify and unify multiple rates to promote transparency and reduce arbitrage opportunities.

She expressed optimism that a stable exchange rate would boost investor’s confidence and attract foreign investment.

The apex bank’s mouthpiece called for dedication to market regulations, stressing that transparency is critical to fair exchange rate determination and stability for businesses and persons.

Read also

Currency hoarders to lose big as CBN governor unveils plans to crash dollar at Forex markets

Analysts predict naira recovery

Analysts believe that Nigeria’s currency, the naira, is suffering volatility due to FX backlogs.

According to them, the lack of payment of backlogs has shrunk investor’s confidence in Nigeria’s economy as they can not repatriate funds due to them.

Financial expert and economist Daniel Kanu said it is not yet Uhuru for the naira as other factors are responsible for its poor performance.

Kanu said.

“This is one step in the long line of issues to be addressed by the Nigerian government. We need to earn more forex and to earn more forex; we need to export more items. Nigeria needs to shore up its non-oil exports.
It is risky to have one source of forex for a country. Even if you’re exporting to neighbouring countries, demand payment in dollars so can shore up your forex earnings.

CBN pays 14 banks’ FX backlog in a bold move to strengthen the naira

Read also

CBN tells Nigerians to anticipate new price of petrol as Dangote, Refinery, others start production had reported that the Central Bank of Nigeria (CBN) had cleared the entire foreign exchange forwards liability of 14 banks.

According to reports, a CBN official disclosed Wednesday that settlements with foreign airlines had also begun.

Nigeria has about $7 billion in mature FX forwards. This is a significant worry for investors as foreign currency shortages continue to cause the naira to depreciate despite assurances by the apex bank to clear the backlogs.


Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner.