Forex still needed by CBN to clear backlog, according to Fitch

The Central Bank of Nigeria (CBN) does not currently have enough foreign exchange (forex) to meet the backlog of demand in the nation, according to Fitch, one of the top credit rating organizations in the world.

In addition to cautioning that Nigeria’s high interest payment to revenue ratio is a major weakness on its sovereign credit rating, Fitch’s Director of Middle East and Africa Sovereigns, Gaimin Nonyane, made this statement in a webinar yesterday.

According to Fitch, Nigeria’s high interest payment to revenue ratio and central bank’s inability to meet demand are factors that are weighing on the country’s sovereign credit rating.

Remember that since President Bola Tinubu took office last year, the CBN has cleared $2 billion of a backlog of approximately $7 billion in FX forwards.

Nonyane, however, stated that the country’s cash shortages would continue to put pressure on the naira, which now has a thirty percent difference between official and parallel values.

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

She stated that Fitch anticipated the naira to close the year slightly over 900 in relation to the US dollar. The official exchange rate has varied greatly, surpassing N1,299, and is currently N846 to the dollar.