Despite $500m to Address Verified FX Backlog, Naira Plunges to N1,500 Per Dollar
The free fall of the Naira continued at the parallel market as the United State Dollar exchanged for N1506/$ yesterday from the N1,410 it sold the previous day despite the release of $500 million by the Central Bank of Nigeria (CBN) to various sectors to address the backlog of verified foreign exchange (forex) transactions.
The Naira also fell at the official market to N1,349 from the N891.90/$ it traded the previous day. The window also saw an intra high of N1,410.
Recall that in June 2023, the CBN announced the unification of the foreign exchange market which sent the exchange rate rising to almost N800/$ from $1/471.
The naira has lost almost 200% of its value since the action of the CBN in June despite multiple assurances by the CBN and the federal ministry of finance to tackle the supply side of foreign Exchange.
Speaking during a panel session at the Nigeria Economic Summit (NES) in Abuja in October 2023, the Minister of Finance and coordinating minister of the economy, Wale Edun said the government has a line of sight of forex inflows into the country in weeks rather than months.
“There is a line of sight of $10 billion worth of foreign exchange in the relatively near future in weeks rather than months.”
He explained that President Tinubu has signed an executive order that effectively allows under forbearance all the cash that is in the domestic economy to legally come into the formal money supply.
“Mr President announced that he had taken measures to ease illiquidity in the forex market which we know is very problematic at this time. The market is illiquid; it’s not functioning properly because there is no supply and there are various reasons for that.
CBN pumps fresh $500 million
Yesterday, the acting Director of Corporate Communications at the CBN, Mrs Hakama Sidi Ali, in a statement, noted that the management of CBN was committed to settling all legitimate foreign exchange backlogs within a short time frame.
She said the CBN Governor, Mr Olayemi Cardoso, had begun implementing a comprehensive strategy to improve liquidity in the Nigerian foreign exchange market in the short, medium and long-term.
“As the governor said, the CBN’s focus is on addressing fundamental issues that have hindered the effective operation of the Nigerian FX markets over the years,” she added.
Mrs Ali urged all participants in the market to play by the rules, stressing that transparency in the market would enable the fair determination of exchange rates, and by extension guarantee stability for businesses and individuals.
With the latest intervention, The CBN has released over $2.5bn to clear the forex backlog which is tutored to be around $6.5bn.
