Relief as CBN finally clears all valid FX backlog

The Central Bank of Nigeria (CBN) announced on Wednesday that it has finally settled all valid foreign exchange backlogs, fulfilling a key pledge by Governor Olayemi Cardoso, to process inherited claims totaling US$7 billion.

This was contained in a mailed statement by Hakama Sidi Ali, CBN’s Acting Director, Corporate Communications.

According to her, the CBN recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

She also disclosed that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured, and invalid transactions were promptly referred to the relevant authorities for further scrutiny.

Cardoso had recently declared that clearing the FX backlog remained a priority in order to restore credibility and confidence in the Nigerian economy.

“It was important that we go through an independent and credible process that would determine the authenticity of those obligations, and, at this point, I can tell you that we have now cleared all genuine, verifiable transactions. This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us,” he had noted.

Clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in last month’s Monetary Policy Committee meeting to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.

Cardoso also used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increases in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.

Meanwhile, external reserves has seen a significant increase, rising by $993 million to $34.11 billion as of March 7, 2024, the highest level in eight months.

The month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas, as well as higher purchases of local assets, including government debt securities, by foreign investors.