Nigeria Economy

Naira Strengthens As Cbn Clears 6.7Bn Forex Debts

Naira Strengthens as CBN Clears $6.7bn Forex Debts

The Nigerian government, acting through the Central Bank of Nigeria (CBN), has initiated the settlement of matured foreign exchange (FX) forward contracts owed to various creditors, as reported by Yohaig NG. A knowledgeable source confirmed the commencement of payments last Thursday.

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In a significant financial move, three banks, namely Citi Bank, Stanbic IBTC, and Standard Chartered Bank, are said to have received full settlement of their due FX debts. The finance minister, Wale Edun, has put the total backlog at an estimated $6.7 billion.

This development has had a positive impact on the Nigerian currency, with the naira appreciating to N1,120 against the dollar, marking a 4.27% increase from the previous day’s rate. Currency traders, including Bureaux De Change operators, have observed a robust recovery of the naira, which had a strong close at N1,120/dollar after opening at N1,170/dollar.

The naira’s value varied across different locations in Lagos, averaging 1,120/$, and reaching as high as 1,040/$. In Abuja, the average was slightly higher at 1,200/$. Despite this, Yohaig NG notes that there are 21 commercial banks currently in operation within the country.

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Statements from two of the banks confirmed the CBN’s action, with Stanbic IBTC acknowledging the clearance of Retail SMIS obligations and Citi Bank’s Treasury and Trade Solutions department celebrating the development. The CBN’s discreet approach to the settlements began the previous day and continued overnight.

While the paid banks represent only a fraction of the outstanding FX forwards, with the majority still pending in tier 1 banks, there is optimism for future settlements. The CEO of a Tier 2 bank, who preferred anonymity, disclosed a $100m credit from the CBN, expressing confidence in the resolution of the outstanding balances.

However, not all commercial banks have received such payments, leading to some discontent within the sector. Unofficial sources from the CBN have indicated that those banks yet to be credited are expressing grievances, and feeling deprived of their entitlements.

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The Association of Corporate Treasurers of Nigeria (ACTN) and the Nigeria Employers Consultative Association (NECA) have both lauded the CBN’s move as a significant step towards stabilising and instilling confidence in the foreign exchange market. The Manufacturers Association of Nigeria (MAN) remains cautious, awaiting confirmation of cleared backlogs for its members.

The Nigerian Economic Summit Group and the Nigerian Association of Small and Medium Enterprises have also reacted, with the latter questioning whether the payments will reach the intended end-users. Concerns about the transparency of the CBN’s forex management and the overall business climate in Nigeria continue to be topics of discussion.

President Bola Tinubu has assured of plans to enhance the country’s forex liquidity, with the finance minister projecting about $10bn inflows in the near term to address the forex backlog and stabilise the naira.

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The naira’s appreciation was also evident in the official market, closing at N793.28 to the dollar, a slight improvement from the previous day. The highest and lowest prices within the day’s trading were N1,018.60/$ and N730.00/$, respectively.

The Federal Government’s expectation of $10bn to clear forex backlogs and the various potential sources of this funding, including future gas and oil dividends, sovereign wealth funds, and international financial institutions, has been a focal point in recent economic discussions.


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The recent move by the Central Bank of Nigeria to commence the clearance of the $6.7 billion FX backlog is a commendable step towards rectifying the longstanding issues plaguing Nigeria’s foreign exchange market. This decisive action not only strengthens the naira but also sends a clear message of commitment to the financial sector and international investors.

The immediate impact on the naira’s value is a testament to the power of strategic financial interventions. However, the true measure of success will be the sustainability of these improvements. It is imperative that the CBN continues this momentum, ensuring that all outstanding FX forwards are settled promptly. This will not only bolster the confidence of the business community but also enhance the overall economic stability of the country.

We believe that the CBN’s approach should be transparent and inclusive, ensuring that all commercial banks are treated fairly in the settlement process. The grievances of those banks yet to receive payments must be addressed to maintain a harmonious banking ecosystem.

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Moreover, the government’s role in securing the anticipated $10 billion inflows is crucial. These funds are essential not just for clearing the FX backlog but also for providing a buffer against future economic shocks. The government must work diligently to secure these funds and manage them with the utmost transparency and accountability.

In our view, the CBN and the federal government must also focus on long-term strategies to diversify the economy, reduce reliance on oil revenues, and encourage foreign direct investment. By doing so, Nigeria can build a more resilient economy that is less susceptible to the volatility of the global market.

The recent developments in the FX market are a positive sign, but they are just the beginning. It is the responsibility of those in power to ensure that these gains are not ephemeral but are the foundation for a robust and sustainable economic future for Nigeria.

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Did You Know?

  • Nigeria’s foreign exchange reserves have fluctuated significantly over the years, influenced by global oil prices, as the country relies heavily on oil exports for its foreign exchange earnings.
  • The Central Bank of Nigeria operates a managed float exchange rate regime, which has been subject to criticism for lack of transparency and contributing to market uncertainty.
  • The concept of FX forwards is a financial tool that helps businesses manage volatility by locking in an exchange rate for a transaction to be completed in the future.
  • The Nigerian Naira has experienced a series of devaluations over the past decades, reflecting the country’s economic challenges and efforts to stabilize the currency.
  • The Association of Bureaux De Change Operators of Nigeria plays a critical role in the foreign exchange market, often impacting the parallel market rates through their buying and selling activities.



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  • Ubaso Nwaozuzu

    Ubaso Nwaozuzu is a content creator, digital marketer, and cigar enthusiast who loves DIY, people-watching, fishing, gardening, bodybuilding, cooking, and grilling. Ubaso has been an avid golfer for many years, and you can often find him on the golf course with his buddies. He also enjoys billiards and bowling in his free time and occasionally plays football or boxing to stay in shape. When he's not working or playing sports, he likes to relax by reading books about survival or wine tasting! Email:

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