The Central Bank of Nigeria (CBN) has reportedly made significant efforts to address the backlog of foreign exchange (forex) demands, particularly for banks and airlines.
Financial institutions have noted the clearance of their pending forex requests, and airlines have also seen progress in resolving their outstanding forex needs.
The exact source of funds used to clear these backlogs remains unclear, but the Nigerian government had previously announced a plan to resolve forex backlogs by injecting $10 billion into the system.
A recent Stanbic IBTC report supports these efforts, stating that the CBN has initiated the process of clearing the backlog of outstanding Retail Secondary Market Intervention Sales (SMIS) obligations.
The exact volume of forex cleared in this exercise has not been disclosed yet.
While the CBN’s external reserves stood at approximately $33.3 billion as of October 31, 2023, it is not certain that these reserves were the source of the recent forex supply.
The move by the CBN to address these backlogs is a significant development, as forex scarcity has created challenges for banks and airlines, impacting their operations and financial planning.
This effort is expected to alleviate pressure on the forex market and contribute to a more stable exchange rate environment.
However, it is essential to monitor the long-term sustainability of these measures and await further details on the strategies employed by the CBN.
This action is likely to restore confidence among foreign investors and business operators who rely on forex availability and predictability.
Source: Nairametrics