Foreign Currency

Naira to Dollar today: CBN clear all forex backlog – Wetin e mean for di economy?

Wia dis foto come from, Getty Images

Di Central Bank of Nigeria tok say e don clear all valid foreign exchange backlogs wey bin amount to about $7 billion.

In simple terms, e mean say all di foreign exchange wey CBN dey owe commercial money banks, dem don pay am.

According to a statement on Wednesday by di CBN oga for communication, Hakama Ali, di apex bank just finish paying di final $1.5 billion wey mean say e don clear all di backlogs.

Ali tok say CBN engage one ogbonge audit company make dem check to make sure say na only legitimate claims dem clear.

Yemi Cardoso, di oga kpatakpata for CBN bin don tok for one interview in February say audits show say about $2.4bn of di $7bn foreign exchange backlog wey im meet as e become govnor no get head, so dem no go pay those ones.

E also tok say di clearing of FX backlog na a major priority “to restore credibility and confidence in di Nigerian economy”.

But di question wey many pipo dey ask be say how dis clearance of FX backlog go affect di stability of di naira against di dollar?

Okey Okere, wey be ogbonge economist, explain to BBC Pidgin say di move to clear backlog na good move, but weda e go get any effect on naira stability na anoda mata.

“Di first question to ask be say, where di ova $7 billion come from? Na from di money wey Nigeria dey make from crude export abi na borrow dem borrow am?

If di money na from our oil exports, den e no go get any positive effect on di naira, because e dey comot forex from di FX market and remember say wetin dey cause naira instability na scarcity of forex,” Dr Okere tok.

“But if on di oda hand, na from loan dem get di dollars, and di money from oil exports still dey come, den e fit get positive impact on di naira, maybe temporarily.”

Wia dis foto come from, Okey Okere

Wetin we call dis foto,

Dr Okere tok say di challenge of forex in Nigeria na dat of demand and supply

Okere tok say wetin dey affect di naira na wetin economists dey call balance of payment, which mean to say, di amount of FX wey dey enta a kontri versus di amount wey dey comot.

“If di amount of FX wey dey comot dey higher dan di amount wey dey come in, e go dey give pressure on di currency.”

“We need to increase di inflow of FX into our kontri, and reduce di outflow. Dat na di only way to reduce how we dey depend on di dollar and stabilise our own currency.”

Mr Marcel Okeke, former Chief Economist wit Zenith Bank, also tok similar tin for im interview on Channels TV on Thursday.

Okeke tok say di challenge of di forex market in Nigeria na dat of demand and supply, “and we neva see any substantial improvement in di supply of forex in di market.”

Recalling the monies wey Nigeria goment dey owe foreign airlines wey make some of dem suspend flight operations in di kontri, Okeke tok say e no sure whether dis monies follow for di backlog wey di CBN tok say dem don clear.

“In effect, clearing backlogs does not in any way reduce di pressure (on di naira). Just as di name tok, backlog na wetin happen in di past, e no get any current impact,” oga Okeke tok.

Dollar to naira exchange today

Wia dis foto come from, Getty Images

Checks by BBC Pidgin on di CBN website show say di naira dey trade at N1,409 to buy and N1,410 to sell, as at Thursday, March 21, 2023.

Dis mean to say di price come down from N1,560 to $1 wey be di official price two days earlier.

On di parallel market on Thursday, 1 US Dollar dey exchange at N1,595, and dis na significant improvement from wetin e be in February wen naira fall to an all-time low as one dollar dey almost near N2,000.

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