Relief as CBN begins clearing $7bn FX obligations

Nigeria’s foreign exchange market may soon experience some liquidity as the Central Bank of Nigeria (CBN) has begun clearing the backlog of foreign exchange obligations. Multiple sources said the CBN has taken steps to douse the tension generated by its inability to clear forex backlog for banks and airlines. The CBN has been burdened by […]

Nigeria’s foreign exchange market may soon experience some liquidity as the Central Bank of Nigeria (CBN) has begun clearing the backlog of foreign exchange obligations.

Multiple sources said the CBN has taken steps to douse the tension generated by its inability to clear forex backlog for banks and airlines.

The CBN has been burdened by the FX backlog estimated at about $7bn.

The beneficiaries of the CBN remittance are banks and airlines, bolstering expectations among foreign airlines operating in Nigeria.

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For instance, the United Arab Emirates (UAE) carrier, Emirates, may soon resume flights to Nigeria as both countries finalise agreements which may see the Arab country lift its visa and work permit bans on Nigerians.

Our correspondent reports that the Emirates’ trapped funds is a major issue which forced the airline to suspend flights to Nigeria two years ago.

The news of clearing of the backlogs came a few days after the apex bank vowed to inject $10bn into the forex market which has been under severe pressure in recent times with the dollar exchanging for over N1,200 in the parallel market.

The Nigeria Autonomous Foreign Exchange Market (formerly I &E window) opened trading yesterday at N800 to the dollar, reaching a high of N1,018 at mid-day trading and a low of N730/$ and finally closing at N794/$.

It would be recalled that the NAFEM window closed at N799 to the dollar at the close of business on Wednesday.

At Allen avenue, a major parallel market in Lagos, the dollar exchanged for N1,150. It exchanged for a record N1, 300 in the same market earlier this week.

The CBN’s intervention has raised hope of stability in the market in days to come as the apex bank was said to have paid over 75 percent to 80 percent of outstanding matured FX forwards to banks.

Spokesman of the CBN, Isah Abdulmumin confirmed the development to our correspondent in a chat, saying the clearing of backlog would continue next week.

“The rest would be cleared soonest,” he said in a text message to one of our correspondents.

Daily Trust further learnt that airlines are already heaving a sigh of relief over the development which has seen more than half of their trapped funds cleared.

Foreign airlines have been unable to repatriate over $700m of their ticket funds to their home countries; the development which forced Emirates Airlines to suspend flights to Nigeria.

However, Emirates is said to be targeting next month to resume operations after finalising talks with the federal government on removing the ban on visa and work permit.

The Dubai-based carrier could not be reached yesterday. An enquiry sent to the airline was not responded to as of press time.