The Acting Governor of the Central Bank of Nigeria (CBN), Mr. Folashodun Shonubi, has announced that the CBN is working closely with commercial banks to resolve the unsettled foreign exchange (FX) backlog within the next two weeks. This move is aimed at ensuring liquidity in the FX market, with a specific focus on addressing issues within the Bureau De Change (BDC) segment.
Mr. Shonubi explained that the CBN, in partnership with commercial banks, has been making efforts to clear the backlog, which has been estimated to be between $2 billion and $2.5 billion. He noted that substantial progress has already been made, with many banks in Nigeria having already resolved a significant portion of their obligations related to the FX backlog.
The Acting CBN Governor emphasized that the central bank and commercial banks have been working on various structures to facilitate the resolution of this issue. As part of this process, banks have made FX available to importers and other stakeholders who needed it to meet their obligations. Discussions are ongoing with banks to restructure their obligations related to the FX backlog.
Mr. Shonubi further revealed that some customers who still have outstanding obligations related to the FX backlog are actively engaged with their respective banks, and the CBN’s collaboration with these banks is focused on clearing this backlog within the next one or two weeks.
Highlighting the CBN’s role in the FX market, Mr. Shonubi noted that the central bank’s interventions in the market have evolved over the years. Today, the CBN contributes less than 25% to the FX market volumes, emphasizing its commitment to maintaining rate stability and ensuring market functionality.
He also pointed out that a significant amount of FX is being made available through the banking system by commercial banks to their customers, which does not pass through the CBN and does not contribute to the demand faced by the central bank.
Additionally, Mr. Shonubi mentioned that the CBN has concluded its investigations and will take action against entities involved in illegal FX transactions. Crown Agents and other similar players that have been conducting FX transactions outside official channels will face consequences for their actions. The CBN is determined to maintain transparency and compliance within the FX market.
In conclusion, Mr. Shonubi hinted that Bureaux De Change (BDCs) that do not transition to electronic operations will gradually phase out of the system. The CBN believes that reducing the reliance on cash-based transactions is essential for the future of the FX market in Nigeria.
The collaboration between the CBN and commercial banks is expected to alleviate the FX backlog, enhance market stability, and promote transparency in the Nigerian foreign exchange market.