Naira rises by 4.55% after CBN clears FX backlog

Naira has maintained a steady appreciation, gaining 4.55 percent of its value against the dollar on increased dollar supply after the Central Bank of Nigeria (CBN) cleared all foreign exchange (FX) backlog.

The summary of the FX trading auction revealed that naira appreciated by 4.55 percent as the dollar was quoted at N1,492.61 on Wednesday, stronger than N1,560.57 quoted on Tuesday at the Nigerian Autonomous Foreign Exchange Market (NAFEM), according to data from the FMDQ Securities Exchange Limited.

The intraday high closed at N1,620 per dollar on Wednesday, stronger than N1,626.50 closed at on Tuesday. Also, the intraday low strengthened to N1,350 per dollar on the same day, stronger than N1,415/$1 closed at on the previous day.

The dollar supplied by FX market players increased by 37.49 percent to $268.29 million on Wednesday from $195.13 million recorded on Tuesday at NAFEM.

The Central Bank of Nigeria (CBN) declared on Wednesday that it has successfully resolved all valid foreign exchange backlogs, as pledged by Governor Olayemi Cardoso, addressing inherited claims amounting to US$7 billion.

Hakama Sidi Ali, CBN’s acting director of corporate communications, conveyed this information in a statement sent via mail. She stated that the CBN finalised the payment of $1.5 billion to settle obligations to bank customers, thereby clearing the remaining balance of the FX backlog.

Furthermore, she revealed that independent auditors from Deloitte Consulting meticulously reviewed these transactions to ensure the legitimacy of claims, with any invalid transactions promptly referred to relevant authorities for further investigation.

Cardoso emphasized the priority of clearing the FX backlog to enhance credibility and confidence in the Nigerian economy.

The strain on the naira/dollar exchange rate is gradually diminishing, with Nigeria’s external reserves showing sustained growth over the past month.

According to data from the CBN, foreign currency reserves rose by 3.62 percent to $34.37 billion as of March 12, 2024, compared to $33.17 billion recorded at the beginning of February 2024.

Additionally, the CBN reported a significant surge in Diaspora remittances, which skyrocketed by 433 percent to $1.3 billion in February, compared to $300 million in January.