The Central Bank of Nigeria has commenced the payment of outstanding matured FX forwards owed to various creditors.
The amount of overdue forward payments is estimated at $6.7 billion, according to the Minister of Finance, Wale Edun.
A source familiar with the development confirmed the payment on Thursday.
Meanwhile, unconfirmed sources said three banks received full payment of debts owed.
The banks are Citi Bank, Stanbic IBTC and Standard Chartered Bank.
Meanwhile, the naira has risen to N1,120 against the dollar as the foreign exchange market reacted to news that the Central Bank of Nigeria has begun to clear some of its FX backlog on Thursday.
This represents an appreciation of N50 or 4.27 per cent compared to the N1,170 it traded for on Wednesday. Currency traders, also known as Bureaux De Change operators, who spoke to Osun Defender stated the naira was recovering well after making a quick recovery from N1,170/dollar in the morning to close trading at N1,120/dollar.
The naira in Lagos recorded an average of 1,120/$ on Thursday, appreciating to 1,040/$ and 1,125/$ in different locations on Thursday. It traded at 1,170/$ on Wednesday. In Abuja, the average price of the naira against the dollar was 1,200.
The source said, “Three banks payment received full payment from the CBN. On the amount, no bank would want to disclose that information.
Statements from two of the banks, obtained by Osun Defender confirmed the payment of FX forwards by the CBN.
Stanbic IBTC in a statement said, “Yesterday, the apex bank began clearing the backlog of outstanding Retail SMIS obligations. The total amount cleared is yet to be ascertained.”
Also, Citi in a statement issued by its Treasury and Trade Solutions department, exclaimed, “CBN HAS DONE IT.”
The bank enjoined its customers to begin to speak with their respective Relationship Manager or Trade Service Professional for clarification on the matter.
The circular titled ‘Settlement of Matured FX Forwards by CBN’, said, “We have been directed to inform you that the CBN has delivered all outstanding matured forward forex.
“We thank you for your patience and cooperation and value you for your business and partnership. Please speak with your Relationship Manager or your Trade Service Professional for clarification and additional details.
“It is a gradual payment that was done secretly, CBN didn’t make a fuss about it. It started yesterday and continued all through the night.”
The source added that paid banks represent a small percentage of outstanding FX forwards with the largest percentage mostly in tier 1 banks yet to be settled.
He, however, expressed hope that they will be settled in the next tranche maybe with a lower percentage.
The CEO of a Tier 2 bank who does not want his name mentioned, also confirmed that his bank received $100m from the CBN, expressing confidence that the outstanding would soon be settled.
He said, “As I speak with you, our bank has been credited with $100m by the Central Bank and we are confident of getting the balance soonest. This is a positive development for the economy and trade in particular.”
Reacting, the Association of Corporate Treasurers of Nigeria said the decision to settle matured foreign exchange forwards is a significant step in promoting stability and confidence in Nigeria’s foreign exchange market.
The association comprising all corporate treasurers in Nigeria in a statement obtained by our correspondent said the action demonstrates the apex bank’s commitment to ensuring the ease of doing business and reducing uncertainty in the market.
The statement signed by the association president, Adeyinka Ogunnubi, read, “We, at ACTN, believe that the timely settlement of matured FX forwards is crucial for our members and the broader business community. It allows our corporate treasurers to efficiently manage their foreign exchange risks and plan for their financial obligations.
“We recognize the CBN’s responsiveness to the concerns of businesses and its continued efforts to implement policies that enhance the resilience of the Nigerian financial system.
“As an association dedicated to advancing best practices in corporate treasury management, ACTN will continue to work closely with regulatory authorities to support policies that foster transparency, predictability, and stability in Nigeria’s financial markets.”
Also reacting, the Director General of the Nigeria Employers Consultative Association, Mr Wale Oyerinde, said, the actions of the new administration of the Central Bank of Nigeria have shown tremendous improvement in the FX management.
He said, “Well, there is no doubt that the economy lacked the requisite FOREX to completely close down the outstanding matured FX in banks. However, the actions of the new administration through the CBN have shown tremendous improvement in FX management, which was a huge challenge in the last administration. The current CBN management has stepped up forex intervention in the FOREX market, which is now accounting for 75 per cent delivery of the matured FX.
‘While we commend this action and the determination to clear all the standings, we hope that this effort will be sustained. The sustainability of this intervention will largely depend on the guarantee of FOREX inflow from all available sources. With stable, focused and growth-induced reforms, another opportunity for FOREX like increased FDI will be enhanced,” Oyerinde added.
Hafsoh Isiaq is a graduate of Linguistics. An avid writer committed to creative, high-quality research and news reportage. She has considerable experience in writing and reporting across a variety of platforms including print and online.