Reprieve came to the financial markets on Thursday with the Central Bank of Nigeria (CBN) clearing matured forward foreign exchange (forex) backlogs with a number of banks.
Analysts who spoke with Blueprint Newspaper said, this will calm the nervous economy and further reinforce confidence in the financial system.
Market makers said, the clearance started since Wesnesday.
One of the immediate result of this is that the naira is beginning to add weight.
It will be recalled that Blueprint Newspaper reported last week of plans by the presidency to ‘corner’ dollar reich’ Nigerians and those with ill-gotten dollar to boost forex supply.
The amount of overdue forward payments is estimated at about $6.7 billion, according to government officials. Clearing that backlog has weighed on the naira, which fell to a record low of almost 1,000 per dollar on the official market this week.
“We have being directed to inform you that CBN has cleared all outstanding matured forwards forex,” a note from Citigroup showed.
“I can confirm the backlog in 14 banks have been cleared. Don’t quote me as I don’t have the details yet,” source said.
Another commercial bank who preferred anonymity confirmed this yesterday.
“Yes, the CBN commenced forex backlog payment to our bank. yesterday”.
It added that Stanbic IBTC also alluded to the clearing of the forex backlogs.
Blueprint had reported that in an effort to sustain the recent appreciation of the naira against the dollar, the Federal Government has initiated moves to bridge the supply gap fueling the currency’s decline, reaching out to individuals hawking dollars for a parley.
According to reports, it was learnt from top government sources that the government was reaching out to individuals hoarding the dollar, establishments and those found to have looted the treasury to make them “bring their monies to the mainstream market.” It was learnt that the government was willing to do whatever was necessary to solve the problem.
A top source in the Presidency said the initiative formed the crux of two Executive Orders recently signed by President Bola Tinubu.
Speaking on the panel session of the 29th Nigeria Economic Summit, held in Abuja last week, Finance Minister and Coordinating Minister of the economy, Wale Edun, said, “Mr President announced that he had taken measures to ease illiquidity in the forex market, which we know is very problematic at this time.
“The market is illiquid; it’s not functioning properly because there is no supply, and there are various reasons for that. The solution that the President has put on the table is that he has signed an executive order that effectively allows, under forbearance, all the cash that is in the domestic economy to legally come into the formal money supply.”
