ENUGU, Nigeria (VOICE OF NAIJA)- The Central Bank of Nigeria (CBN), announced that it has cleared all valid foreign exchange backlog.
This is as overseas remittances have pushed foreign reserves to $34.11 billion, the highest in 8 months.
According to a statement signed by CBN’s Acting Director of Corporate Communications, Ms Hakama Sidi Ali, the apex bank said it had fulfilled a key pledge of the CBN Governor, Mr. Olayemi Cardoso, to process an inherited backlog of $7 billion in claims.
The statement also stated that the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.
“Independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured. Any invalid transactions were promptly referred to the relevant authorities for further scrutiny”, the statement noted.
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It further explained that in a recent meeting, Mr Cardoso, had declared that clearing the FX backlog was the CBN’s priority to restore credibility and confidence in the Nigerian economy.
The statement disclosed also that clearance of the foreign exchange transactions backlog was part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and curb imported inflation, spurring confidence in the banking system and the economy.
“Cardoso used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market,” the statement added.
Furthermore, it noted that as of March 7,2024, external reserves had risen by $993 million to $34.11 billion, which was the highest level in eight months.
“The month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors“, it said.
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Meanwhile, in the parallel market on Wednesday, March 20, naira strengthened to N1,400 to the dollar, closing at N1,492 at the NAFEX official market.
This forced market speculators to sell off their forex in anticipation of a further drop in prices.
Since the appointment of its governor, Cardoso, on September 15, 2023, The apex bank has settled the forex backlog owed to airlines and businesses.
Economy Post had reported that Bureau De Change (BDC) operators recently halted currency sales in Lagos and Abuja as the Economic and Financial Crimes Commission (EFCC) intensified its raids, forcing foreign currencies to weaken.
In mid-February 2024, the EFCC commenced raids on BDCs to halt naira slide. The anti-corruption agency had arrested several BDC operators for economic sabotage, saying that they are responsible for the continued depreciation of the naira in both parallel and FMDQ (official) markets.
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But currency experts hold that the strengthening of the naira is just a temporary relief. They urged the Nigerian government to begin to think long-term rather than devise a knee-jerk response to the naira depreciation.
An economist, Mr Chukwuma Ani, “The reality is that our dollar earnings are insufficient due to our limited production and exports. Our primary source of foreign exchange, crude oil, is refined overseas, contributing to our trade deficit.”
He added that, “We must reverse this trend and promote the export of Nigerian manufactured goods worldwide. However, this necessitates addressing challenges such as inadequate power supply, infrastructure deficiencies, difficulties in sourcing raw materials, high credit costs, and delays at ports.”