CBN to clear backlog of forex demand as naira trade N281/$

The Central Bank of Nigeria has announced plans to clear all existing backlog of Foreign Exchange (forex) demand in the country prior to take off of its flexible foreign exchange policy. The Acting Director of Communications, CBN, Mr Isaac Okorafor, said this to newsmen on Monday in Abuja.
The naira which opened on Monday at about 253 to the dollar at the inter-bank market, went up to 263, before settling at 260 as at 2pm. Following CBN’s announcement to trade forex to banks and clear the foreign exchange backlog, which had existed for months, FMDQ extended the trading period from 2pm to 5:30pm to accommodate the marketing reality. “In order to engender market confidence, ensure credible price formation and sustain the integrity of the Nigerian Inter-bank FX market, the Central Bank of Nigeria (CBN) has resolved to clear all the backlog of FX demand in the country through spot and forward settlements,” CBN said in a statement on Monday.The forex, which was sold at Special Secondary Market Intervention Sales (SMIS), saw banks receive a total of $532,867,169.11, ranging from 382 to 197 against the greenback. Following the sales of forex by the CBN, the naira took a downward swing N283, its highest spot for the day, and closed the new regime’s first trading day at 281.85.
Isaac said that the move was to ensure the survival of the inter-bank forex trading under the new forex guidelines, which took effect from Monday, June 20.
The CBN forex backlog is estimated at four billion dollars. Okorafor said that all existing legitimate forex demand for imports, school fees and medicals, among others, would be met. “In order to engender confidence, ensure credible price formation and sustain the integrity of the Nigerian inter-bank forex market, the CBN has resolved to clear all the back log of forex demand in the country. “This will be done through spot and forward settlements,” he said.