Nigeria: CBN Still Short of Forex to Clear Backlog – Fitch

Fitch, one of the leading global credit rating agencies, has said that the Central Bank of Nigeria (CBN) still lacks sufficient foreign exchange (forex) to clear the backlog of demand in the country.

Director of Middle East and Africa Sovereigns at Fitch, Gaimin Nonyane, who stated this yesterday in webinar, also warned that Nigeria’s high interest payment to revenue ratio is a key weakness on its sovereign credit rating.

“Nigeria’s central bank still lacks the foreign exchange to clear the backlog of demand, and the country’s high interest payment to revenue ratio weighs on its sovereign credit rating”, Fitch said.

Recall that CBN has so far cleared $2 billion of a backlog of some $7 billion in forex forwards after President Bola Tinubu took office last year.

Nonyane however said that the forex shortages in the country would keep pressure on the naira, where there is currently a 30 percent gap between the official and parallel rates.

She stated: “We think that the central bank is still very well short of the amount it needs to be able to clear the foreign exchange backlog and also meet the extremely large external financing by the private sectors.”

According to her, Fitch expected the naira to end the year just above 900 against the dollar. The official rate is currently at N846 to the dollar, but has wildly fluctuated, going past N1,299.

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