Nigeria Battles $6.8bn Overdue FX Forwards as Liquidity Crisis Worsens
By Adedapo Adesanya
Nigeria’s Minister of Finance, Mr Wale Edun, has said the country is unable to clear up to $6.8 billion of overdue forward payments in the foreign exchange market, noting that this is preventing the Naira from gaining stability.
Speaking in an interview on Thursday, Mr Edun lamented that the country’s FX market is facing a serious liquidity crisis due to low flows.
“The issue we have now is that the market is not liquid enough,” he said in an interview in New York, per Bloomberg.
The Minister said that resolving the overdue contracts would allow the Naira to strengthen and “pave the way for additional foreign exchange flows.”
He noted that the President Bola Tinubu-led administration was working to balance the fiscal side, which is primarily the responsibility of the government, with the monetary side, a function of the Central Bank of Nigeria (CBN).
“We are committed to encouraging liquidity based on reforms that have been made at the moment, on the fiscal side and the monetary side. And together with the restoration of trust and confidence, we think the FX flows will return,” he said.
Meanwhile, on Thursday, the CBN shelved the Monetary Policy Committee (MPC) meeting scheduled to be held next week.
The apex bank noted that the MPC meeting, which was supposed to take place on Monday, September 25, and Tuesday, September 26, 2023, has been postponed until further notice.
This is in light of uncertainty after it was widely reported that the acting governor of the bank, Mr Folashodun Shonubi, and four deputy governors have resigned, leaving a leadership vacuum.
The nominated CBN Governor, Mr Olayemi Cardoso, is yet to be confirmed in his role as the nation’s Senate is on recess and due to resume on Tuesday.
These developments have not inspired confidence as the Naira at the FX market continues to flirt close to N1,000/$1 ahead of the fourth quarter, when FX is always in high demand as people will be looking to stock up for the festive seasons.