A foreign investor at TLG Capitals, Isaac Marshall, has attributed the naira gain to the decision of the Central Bank of Nigeria (CBN) to clear the FX backlog.
Nigeria’s foreign exchange (FX) reserves have fallen to a six-year low, Marshall said in a statement on his LinkedIn account on Thursday.
He stated that this decline should be viewed as a positive step for the Nigerian currency.
Marshall noted that the Central Bank of Nigeria (CBN) has finally cleared the FX backlog of requests for USD conversions that had plagued the market for years.
This backlog, he argues, has finally ended and currency is nearly synchronised across the parallel and official markets.
Marshall said; “The Central Bank is defending the naira simply by honouring the backlog of USD conversions that market participants have been hoping to complete for years.
“The result is that enormous queue of USD/NGN conversions at the Central Bank has finally ended and currency is nearly synchronized across the parallel and official markets.
“Using reserves to honour legal/proper transactions is the raison d’être of a central bank’s FX reserve.”
Marshall’s statement follows ongoing efforts by Nigerian authorities to manage the country’s foreign exchange.
Nigeria’s foreign exchange (FX) reserves have plummeted by around $2.16 billion in 29 days, amidst CBN efforts to stabilise the naira.
Current figures from the CBN, as of April 15, 2024, reveal that the FX reserves are now positioned at $32.29 billion, a stark decline from $34.45 billion recorded on March 18, 2024.
Nigeria’s foreign exchange reserves fell to their lowest level since September 25, 2017, when they were at $32.28 billion.
CBN attributed the rise to increased remittance payments from Nigerians abroad and heightened interest from foreign investors in local assets, including government debt securities.
The apex bank also noted that the increase was due to reforms in the foreign exchange market and an increase in oil production, among others.(Guardian)
