The backlog of foreign exchange contracts, which is deterring investors from investing in the nation, will be cleared, according to President Bola Ahmed Tinubu.
The Nigerian president made the announcement on Monday while delivering a speech at the ongoing Nigeria Economic Summit #NES29 in Abuja, according to Anaedoonline.ng.
Additionally, Tinubu pledged that Nigeria would respect all upcoming foreign exchange contracts.
“All foreign exchange future contracts will be honoured by this government. I assure you we have a line of sight to the foreign exchange we need to refloat this economy. And we will get it,” Tinubu said.
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According to Anaedoonline.ng, Tinubu’s assurance comes as the Naira, the currency of Nigeria, continues to depreciate as a result of the rising scarcity of US dollars.
As previously reported, the naira started trading at $1,175/$ on the black market and ended the week at $1,190/$. Compared to two weeks ago, when the naira was trading at 1,100/$ on the black market, this represents a decline.
On the Investor & Exporter FX window, the value of the naira did, however, slightly increase. According to the FMDQ, it sold for 808.28/$ at the end of trading on Friday as opposed to 810.05/$ on Thursday. Journalists were informed by several Bureau de Change employees that it has been challenging for them to give foreign currency to customers.
Prior to this, several Nigerian companies received forward contracts with the Central Bank of Nigeria (CBN), which ensured the purchase of dollars at a predetermined price in the future.
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Banks created Letters of Credit (LCs) using these contracts to make it easier to import goods from foreign suppliers. But since February 2023, the CBN has not completed these contracts, leaving a backlog of about $3 billion. In addition, there is a $10 billion backlog that includes unresolved contracts with foreign investors. Due to significant FX liquidity limitations brought on by the CBN’s refusal to address the dollar backlog, numerous transactions, including applications for personal travel allowances and school fees, have been put on hold.
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