CBN clears US$2 bn forex backlog to instill confidence in Nigeria’s fx market

Nigeria’s apex regulatory bank, CBN has successfully settled nearly two billion U.S. dollars in matured foreign exchange contracts over the past three months with intent to address a significant backlog and instill confidence in the forex market.

The country’s substantial foreign currency shortages, exacerbated by declining oil production constituting over 90 per cent of its dollar inflows, have posed challenges for the Nigerian Naira.

The Central Bank has also disbursed 61.64 million U.S. dollars to foreign airlines, part of the outstanding liabilities owed to them in local currency.

Overall, the nation grapples with a forex forward maturity estimated between 7 and 10 billion U.S. dollars, with varying reports on the exact figure.

The inability to promptly settle these obligations has contributed to the Naira’s depreciation by over 50 per cent since it began trading more freely against the dollar in June of the previous year.

In response, the CBN’s recent payments underscore its commitment to resolving pending obligations and stabilising the exchange rate.

President Bola Tinubu has outlined plans aim to alleviate the pressure on Nigeria’s currency including attracting foreign currency inflows by currying investments, enhancing oil production, and reforming the foreign exchange market.