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$10 billion FX Backlog: CBN’s two-week plan is unrealistic – Experts 


The ambitious initiative by the Central Bank of Nigeria to eliminate its $10 billion foreign exchange backlog in just two weeks has piqued the curiosity and skepticism of financial experts and traders within the country.

During an episode of Nairametrics’ OnTheMoney series on Saturday, September 9, 2023, a financial analyst named Zeal voiced reservations about the CBN’s timeline, stating,

“Two weeks is an incredibly brief timeframe, so I assume, for my sanity, that they must have a concrete plan to execute. If the CBN intends to clear this backlog, they should do so without prior announcement.

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Because if they fail to do so within two weeks, it could create even more significant problems. However, I will take them at their word.”

Zeal’s concerns echo the doubts surrounding the feasibility of the CBN’s plan.

The $10 billion backlog has been a longstanding issue, and the sudden promise of resolution in such a short period has left many wondering what has prompted this abrupt change in approach.

Olumide, another financial expert, expressed similar concerns, suggesting that the CBN’s announcement seemed more like an illusion than a feasible reality.

He questioned the origin of the substantial liquidity required for such an ambitious endeavor.

“Ever since I read JP Morgan’s report outlining the Nigerian Central Bank’s exposure and leverage, and more recently, a Fitch rating that highlighted the CBN’s extensive swaps with commercial banks, totaling between $10 to $12 billion, it has become evident that there are underlying issues within our financial system,” Olumide remarked.

“When you delve into the numbers, considering the volume of foreign exchange deposits and our earnings, even with oil prices reaching $90 per barrel, it’s evident that the supply of foreign exchange hasn’t been as robust as one would expect.

Nigeria doesn’t command the lion’s share of oil sales; our participation is limited. This situation raises a fundamental question: Where is the actual source of liquidity?” Olumide pondered.

Furthermore, the Central Bank of Nigeria’s endeavor to eliminate the foreign exchange backlog is perceived as critical to stabilizing the Nigerian currency. This naira has been facing intense pressure due to shortages in foreign exchange.

However, experts caution that any misstep or inadequacy in the execution of this plan by the CBN could result in severe consequences for the exchange rate and the country’s overall economic stability.

“At the end of the day, central banks typically don’t engage in public relations when it comes to such actions. There are concerns when a central bank lacks the financial power to back its commitments; the world has scrutinized our balance sheets and noted our limitations. So, when you declare the intention to clear the backlog within two weeks, it raises questions. Are you referring to clearing PTA or the entire foreign exchange backlog?” questioned Olumide.

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While the CBN has already dismissed the JP Morgan report and asserted that we have ample FX reserves to meet our obligations, the real concern here is that if this plan doesn’t materialize – considering there are only eight days left since the announcement – the naira could potentially breach the N950/$ threshold. Investors are strongly inclined towards the dollar, which could intensify speculative demand.”

“In my opinion, the central bank needs to exercise utmost vigilance, as any misstep or weakness in their approach could push the naira towards an extremely unfavorable exchange rate,” Olumide emphasized.

Taking into account other pressing issues in the country, such as the increasing metering prices, India’s significant pledges, and developments in the equity market, these are the key highlights from the discussions held during the “Follow the Money” clubhouse event.



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