Naira Appreciates as CBN Clears Forex Backlogs
The Central Bank of Nigeria (CBN) has successfully addressed all valid Foreign Exchange (FX) backlogs, fulfilling a crucial commitment to settle outstanding liabilities amounting to $7 billion. As a result, the Nigerian currency, the naira, experienced significant appreciation in both official and parallel markets.
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On Wednesday, the naira strengthened to N1,490/$1 at the parallel market, compared to N1,590 the previous day, marking a notable N100 gain within a single day. Similarly, at the official Nigerian Autonomous Foreign Exchange Market (NAFEM), the naira closed at N1,492.61 to the dollar, representing a substantial N67.96 increase compared to the previous day’s rate of N1,560.57.
According to Mrs. Hakama Sidi Ali, the Acting Director of Corporate Communications at the CBN, all FX indebtedness has been settled, including a recent payment of $1.5 billion to bank customers. These transactions were meticulously assessed by independent auditors from Deloitte Consulting to ensure legitimacy.
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CBN Governor, Mr. Olayemi Cardoso, reiterated the importance of clearing the FX backlog to restore confidence in the Nigerian economy. He emphasized the necessity of an independent and credible process to verify the authenticity of obligations, ensuring that only genuine transactions were honored.
Furthermore, the CBN reaffirmed its commitment to recapitalizing Nigerian banks, with the last exercise conducted in 2005. This consolidation initiative aims to support the country’s targeted $1 trillion economy, enhance monetary policy transmission, and enforce risk-based supervision to maintain a safe and sound banking system.
In addition, exchange rate volatility has moderated, with the spread narrowing to N222.24/$ from N662.59/$ post-interventions. Despite fluctuations, the CBN remains focused on stabilizing the exchange rate, curbing inflation, and fostering confidence in the banking system and economy.
The recent increase in Nigeria’s external reserves to $34.11 billion, the highest level in eight months, reflects growing remittance payments and foreign investment in local assets. Cardoso emphasized the importance of settling verified FX requests, addressing discrepancies, and maintaining transparency in the FX market.
Looking ahead, the CBN is committed to enhancing communication, fostering financial market development, improving FX liquidity, and ensuring price stability conducive to economic growth. With continuous engagement with stakeholders, the central bank aims to maintain a safe, resilient financial system while pursuing its monetary policy objectives.
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