To clear a backlog of dollars, Nigeria’s central bank has paid roughly $2 billion in unpaid foreign exchange forwards in the previous three months, according to a spokesman, but the naira currency is still hindered by FX shortages.
The largest economy in Africa has matured FX forwards worth around $7 billion, which has alarmed investors. However, the Central Bank of Nigeria (CBN) has pledged to settle the debt to restore investor trust in the foreign exchange market.
“The CBN has also redeemed outstanding forward liabilities amounting to nearly USD 2 billion in the past three months,” acting spokesman Hakama Sadi Ali stated in a statement late on Sunday.
“This underscores the Bank’s commitment to the resolution of pending obligations and a functional foreign exchange market.”
Since oil is Nigeria’s main export and provides more than 90% of its foreign exchange inflows, the country’s diminishing oil production has made its foreign exchange problems worse.
Ali stated that foreign airlines that sold tickets in local naira currency but were unable to withdraw their money from the country had just received $61.64 million from the CBN.
By November’s end, foreign airlines were owed almost $700 million.
“These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate,” added Ali.
To increase foreign currency inflows into Nigeria, President Bola Tinubu has pledged to increase foreign investment, increase oil production, and reform the foreign exchange system.
