…Announced it has disbursed $61.64 million to foreign airlines through Deposit Money Banks, redeeming $2 billion in outstanding forward liabilities in the last three months.
…if the recent convincing actions by the policymakers to turn the tide are sustained, we expect the local currency pressures to ease in 2024FY.
MON, JAN 08 2024-theGBJournal|The Central Bank of Nigeria (CBN) has taken another concrete action to clear its FX backlogs as foreign investors keenly watch the development in the country’s FX space and as the pressure on the local currency to persist.
On Sunday, the apex bank announced it has disbursed $61.64 million to foreign airlines through Deposit Money Banks, redeeming $2 billion in outstanding forward liabilities in the last three months.
The disbursement was revealed by the Bank’s new spokesperson, acting Director, Mrs. Hakama Sidi, who said the move is aimed at eliminating the forex backlog and easing exchange rate pressure.
Sidi said that the disbursement to the airlines was part of the apex bank’s efforts to decrease its outstanding liability.
“This underscores the CBN’s commitment to the resolution of pending obligations and a functional foreign exchange market. The payments consolidate CBN’s ongoing efforts to settle all remaining valid forward transactions, with the aim of alleviating the current pressure on the country’s exchange rate. ” she said.
Since October, the CBN renewed its efforts at solving the challenges stoking the existing FX liquidity constraints.
Notable measures include clearing parts of its outstanding FX backlogs, tightening financial system liquidity with CRR debits and OMO actions, indirectly increasing domestic interest rates, and tolerating more flexibility at the NAFEM.
As a result, analysts say they expect FX liquidity conditions to improve in 2024FY, albeit still frail relative to historical standards, considering the CBN’s current momentum on FX reforms.
Consequently, if the recent convincing actions by the policymakers to turn the tide are sustained, we expect the local currency pressures to ease in 2024FY.
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