CBN Releases $500 Million to Address Forex Backlog, Aims for Stable Naira and Investor Confidence

Nigeria’s Central Bank (CBN) continues its efforts to ease foreign exchange (FX) liquidity issues, injecting another $500 million into various sectors to clear verified liabilities. This move follows last week’s disbursement of approximately $2.0 billion to settle outstanding commitments in key sectors like manufacturing, aviation, and petroleum.

In a statement released on Monday, CBN’s Acting Director of Corporate Communications Department, Mrs. Hakama Sidi-Ali, emphasized the bank’s commitment to resolving the backlog of legitimate FX requests within a short timeframe. This aligns with the CBN’s broader strategy to improve liquidity in the Nigerian FX markets over the short, medium, and long term.

Key points from the news:

• CBN releases $500 million to address FX backlog, following a recent $2.0 billion disbursement.
• Aim is to settle all legitimate FX backlogs and boost investor confidence.
• CBN committed to forex market reforms for transparency and streamlining.
• Efforts target a stable exchange rate and attracting foreign investment.
• Transparency and rule-abiding urged from all market participants.

Sidi-Ali highlighted the focus on addressing fundamental issues that have impeded the Nigerian FX market’s efficiency. The reforms aim to streamline and unify multiple exchange rates, foster transparency, and reduce arbitrage opportunities. A stable exchange rate, she believes, will strengthen investor confidence and attract foreign investment.

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Transparency and adherence to market rules are key to achieving these goals, Sidi-Ali stressed. This will enable fair determination of exchange rates and a smoother market overall.

The CBN’s recent actions indicate a proactive approach to resolving the FX backlog and stabilizing the Nigerian currency. Clearing almost $2 billion in overdue forwards within the past three months demonstrates their commitment. Despite ongoing forex shortages and a $7 billion backlog in matured forwards, the CBN’s continued efforts to settle obligations and instill confidence are encouraging.