CBN clears $1.5bn outstanding fx transactions, eliminates legacy backlog

The Central Bank of Nigeria (CBN) says all valid foreign exchange backlogs have now been settled.

This is according to a statement by CBN’s Acting Director, Corporate Communications, Mrs Hakama Sidi.

Sidi said that the step was in fulfilment of a key pledge of the CBN Governor, Yemi Cardoso, to process an inherited backlog of seven billion dollars in claims.

She said that the CBN recently concluded the payment of 1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the fx backlog.

She also said that independent auditors from Deloitte Consulting meticulously assessed these transactions, ensuring that only legitimate claims were honoured.

According to her, any invalid transactions were promptly referred to the relevant authorities for further scrutiny.

Meanwhile, Cardoso said that the apex bank made clearing the fx backlog a priority to restore credibility and confidence in the Nigerian economy.

“It was important that we go through an independent and credible process that would determine the authenticity of those obligations, and, at this point, I can tell you that we have now cleared all genuine, verifiable transactions.

“This encumbrance to market confidence in the country’s ability to meet its obligations is now totally behind us,” he added.

NEWSVERGE reports that clearance of the foreign exchange transactions backlog is part of the overall strategy detailed in the last Monetary Policy Committee (MPC) meeting.

The aim, according to the CBN, is to stabilise the exchange rate and thereby curb imported inflation, spurring confidence in the banking system and the economy.

Cardoso had used the MPC meeting and a subsequent conference call with foreign portfolio investors to set expectations for sustained increase in Nigeria’s foreign currency reserves and improved liquidity in the foreign exchange market.

The CBN, afterwards, reported a significant increase in external reserves, rising by 993 million dollars to 34.11 billion dollars as of March 7, the highest level in eight months.

The apex bank reported that month-on-month increase was driven by a marked advance in remittance payments by Nigerians overseas.

It said that higher purchases of local assets, including government debt securities, by foreign investors , was also responsible for the increase.