Naira appreciates by 4.6% as CBN clears $7bn forex backlog

The naira has appreciated at the official and parallel markets following the clearance of all foreign exchange (FX) backlog by the Central Bank of Nigeria (CBN).

According to data compiled from the FMDQ Securities Exchange, the naira closed trading at ₦1,410/dollar at the parallel market and ₦1,492 at the official Nigerian Autonomous Foreign Exchange Market (NAFEM) on Wednesday.

The Naira’s gain at the official market indicates a 4.55% increase from the ₦1,560/$1 recorded the previous day - Tuesday at NAFEM, and a gain of 13.5% or ₦190 at the parallel market.

The increased dollar supply reduced the strain on the naira/dollar exchange rate as Nigeria’s external reserves have also recorded significant growth over the past month.

According to data from the CBN, foreign currency reserves rose by 3.62% from $33.17 billion recorded in February 2024 to $34.37 billion as of March 12, 2024.

The Punch reports that the appreciation in the local currency has been linked to the offloading of dollar stocks by speculators following CBN’s clampdown on forex activities and the reduced demand by prospective buyers.

Five months after taking over, President Bola Tinubu had vowed to clear the foreign exchange backlogs he inherited.

The CBN governor, Olayemi Cardoso during an interview on Arise Television last month, said he met about $7 billion forex backlog when he assumed office.

According to a statement by the CBN Acting Director of Corporate Communications, Hakama Sidi Ali, the apex bank had recently cleared $1.5 billion from the backlogs thus confirming the CBN governor’s promise to offset all inherited forex backlogs.

Ali further disclosed that the process of paying back the forex backlog was independently assessed by auditors from Deloitte adding that only legitimate claims were honored.