Nigeria’s foreign exchange market is on the cusp of a liquidity boost, with the Central Bank of Nigeria (CBN) taking significant steps to clear the longstanding backlog of foreign exchange obligations.
Multiple reliable sources have confirmed that the CBN is actively addressing the tension that arose due to its previous inability to eliminate the forex backlog for banks and airlines.
The CBN has been grappling with an estimated $7 billion worth of foreign exchange obligations, weighing heavily on its operations.
This development brings respite to banks and airlines, fostering high hopes among foreign airlines operating within Nigeria.
For instance, Emirates, the renowned carrier from the United Arab Emirates (UAE), is in advanced negotiations with Nigerian authorities. These discussions aim to potentially lift the visa and work permit restrictions on Nigerian nationals, making it likely for Emirates to resume its flights to Nigeria shortly.
It’s essential to note that the issue of Emirates’ funds being trapped in Nigeria significantly impacted the airline’s decision to suspend its flights to the country two years ago.
The news of the backlog clearance follows the CBN’s recent commitment to inject a substantial $10 billion into the forex market. The market has been grappling with severe pressure in recent times, with the dollar reaching unprecedented exchange rates of over N1,200 in the parallel market.
Yesterday, the Nigeria Autonomous Foreign Exchange Market, previously known as the I&E window, opened trading with the dollar at N800, briefly surging to N1,018 during mid-day trading before stabilizing at N794/$. This marked a notable improvement from the previous closing rate of N799 to the dollar.
In contrast, at Allen Avenue, a major parallel market in Lagos, the dollar was exchanging at N1,150, and earlier in the week, it reached a staggering N1,300 in the same market.
The CBN’s intervention has instilled hope for future market stability, as it has already disbursed over 75% to 80% of outstanding matured FX forwards to banks.
Isah Abdulmumin, the CBN’s spokesperson, confirmed this significant development in a conversation with our correspondent, assuring that the clearing of the backlog would continue into the next week. “The rest would be cleared soonest,” he conveyed in a text message to one of our correspondents.
Further investigations by Daily Trust have revealed that airlines are already breathing sighs of relief. More than half of their previously trapped funds have been successfully cleared.
Foreign airlines were unable to repatriate over $700 million of their ticket funds, a predicament that led Emirates Airlines to halt flights to Nigeria.
Nonetheless, there’s a ray of hope as Emirates is reportedly targeting a resumption of operations next month, following promising discussions with the federal government regarding the removal of visa and work permit restrictions.
Despite our efforts to contact the Dubai-based carrier, we received no response at the time of this press release.
