Folashodun Shonubi, the acting governor of the Central Bank of Nigeria (CBN), has assured that the backlog of unmet foreign exchange demand, known as the “dollar backlog,” will be cleared within the next one or two weeks. Shonubi made this statement during a press conference held in Lagos on Monday.
The unresolved foreign exchange backlog owed to local businesses has raised concerns about the confidence in CBN’s recent decision to float the naira, and it poses a risk of discouraging foreign investors from participating in the market.
While some estimates place the backlog at around $2 to $2.5 billion, JP Morgan reported a higher figure, suggesting that the CBN had almost $7 billion in forward contract debt. However, Shonubi dismissed these claims as “misinformation.” He stated, “There is no outstanding $7 billion as claimed by JP Morgan.”
Shonubi explained that banks have been collaborating with the central bank to develop various strategies to clear the backlog. He noted that a significant portion of these obligations had already been addressed by the banks as they matured, making foreign exchange available to importers who needed it.
He clarified, “So we are discussing with them to structure their roles, which is a different matter. Then, some customers still have their obligations, and part of the banks’ instructions in Nigeria is to clear that backlog. This is something we’ve been discussing for a while, and we anticipate clearing it within the next one or two weeks.”
The Urgency of Resolving CBN’s Foreign Exchange (FX) Backlog
The clearing of the foreign exchange backlog has become a top priority for Nigeria’s new administration, led by President Tinubu, who is concerned about the consistent depreciation of the naira against the dollar.
Investors are closely watching the pace of clearing the backlog, as it will greatly impact their confidence in the effectiveness of CBN’s proposed reforms.
Foreign investors are eagerly awaiting the resolution of the dollar backlog, as it will serve as a litmus test for the credibility of the CBN’s reform initiatives.
CBN Enforces Stricter Regulations on Bureau De Change Operators (BDCs)
Additionally, the CBN has been tightening its oversight of Bureau De Change (BDC) operators to enhance the efficiency of the Nigerian foreign exchange market.
The new operational guidelines mandate that BDC operators’ buying and selling spreads should fall within a specified limit. The CBN also requires mandatory reporting by BDC operators to ensure transparency and compliance with official procedures.
Shonubi emphasized that the CBN is investigating the activities of entities that have been bypassing official channels to bring in foreign funds and sell them to Nigerian companies. He warned that these entities could expect further action from the CBN shortly.
Follow techkudi.com for more juicy content