Financial experts have expressed reservations about the two-week timeline given by the Central Bank of Nigeria (CBN) to clear the $10 billion foreign exchange backlog, describing the two-week timeline as being too short and unrealistic.
Recall that the acting Governor of the CBN, Folashodun Shonubi, recently announced audacious plan to eliminate its $10 billion foreign exchange backlog within a mere two weeks.
CBN’s plan to clear the backlog is seen as a crucial step in stabilizing the Nigerian currency, the naira, which has been under pressure due to FX shortages. However, experts warn that any falter or weakness in the CBN’s execution of this plan could have serious consequences for the exchange rate and the country’s economic stability.
Speaking at a seminar in Lagos, financial experts argued that two weeks is a very short timeframe.
Olumide, a financial expert, raised questions about the source of liquidity for such a massive undertaking.
“Ever since I read JP Morgan’s report about the exposure and leverage the Nigerian Central Bank has, and more recently, a Fitch rating highlighted that the CBN engaged in swaps with commercial banks totalling up to $10 to $12 billion, it’s become evident that all is not well within our financial system.
“When you delve into the figures, considering the number of foreign exchange deposits and our earnings, even with oil prices touching $90 per barrel, it’s clear that the supply of foreign exchange has not been as robust as one would hope. Nigeria doesn’t claim the lion’s share of the oil sales; we only participate to a certain extent. This situation raises a crucial question: Where is the liquidity really coming from?” Olumide probed.
