CBN Begins to Clear FX Backlog Owe to Banks
Amidst Nigeria’s foreign exchange crisis, the central bank (CBN) said it has started to clear outstanding foreign currency forwards owed to deposit money banks. The apex bank spokesperson Isah Abdulmumin said on Thursday, with banking sources saying an initial payment of $1 billion had been made.
“The CBN has started paying the FX backlogs to banks. So far, 14 banks have been paid,” Abdulmumin told Reuters but declined to give the amount or name of the banks.
Four banking sources said the banks were paid varying amounts totalling about $1 billion and that the payments would continue in the next few weeks. Nigeria has nearly $7 billion in forex forwards that have matured, which corporates bought from local banks. Banks then repaid foreign credit lines with their own funds when the central bank did not pay out.
That means corporates are unable to get new letters of credit, while the banks are owed dollars. New central bank governor Yemi Cardoso has said clearing the backlog was a priority but gave no timeline for how long it would take.
The economy is facing a US dollar shortage. This continues to have negative impacts on exchange rates across the market. However, the naira has started to claw back FX losses in the official window. Also, the parallel market rate has rebounded as the government maintain plans to stabilise the local currency. Sub-Saharan Africa GDP to Hit US$4.5 Trillion –Euromonitor
