EXPERTS EXPLAIN WHY CBN'S TWO-WEEK STRATEGY TO ELIMINATE FX BACKLOGS WON'T WORK.

Economic experts have remarked that it is very much “impossible” for the apex bank to achieve that within that time frame after the Central Bank of Nigeria (CBN) declaration that it is set to eliminate the FX backlogs within two weeks.

The top bank's acting governor, Folashodun Shonubi, told a press conference that the CBN has been working with commercial banks on a number of mechanisms to clear the backlogs, noting that the banks had all the liabilities.

By doing this, foreign currency will be more easily accessible to importers and exporters. According to Shonubi, there are clients who still owing their own loans, and resolving those backlogs was an aim of the restructuring with Nigerian banks. We've been discussing it for a while, and we hope to have a solution within the next two weeks. This suggests that the duty won't exist.

Since we are still meddling in the market today, it is decision to give the banks in the NFEM access to money has been affected. Considering the volumes, less than 25% of the FX market is by the CBN. Uncommonly mentioned large amounts of FX are made available by the financial sector.

This volume neither comes through the CBN nor is it a part of the demand that contacts us. The short version is that we expect resolving the backlog in two weeks, despite, it is almost three times as much as the CBN provides.

Economic experts, though, expressed disbelief and said it would take months to clear the FX backlog when contacted by phone. Due to FX shortages, the Nigerian naira has been under pressure; hence, the CBN's mission to eliminate the backlog is essential for maintaining the naira. However, Vice-Chairman, Board, HighCap Securities, David Adonri predicts that the CBN won't be able to meet that date.

Adonri remarked, “I saw that in the news.” We have a large backlog of FX transactions, especially from businesses, students, and manufacturers who finished their transactions this year. Do you think it's possible？ I don't believe this since it's not believable.

Similar comments were made by another specialist who desired to remain nameless. She felt that the CBN's announcement was more like idle gossip. He questioned how such a huge project could be paid for.

Despite the apex bank's insistence that the claim is false, I do not think it was just a passing fad. Since I read the JP Morgan research on the exposure and leverage the CBN has, and more recently, a Fitch rating stated that the CBN engaged in swaps with commercial banks ranging from $10 to $12 billion, it has been obvious that something is wrong with our financial system.

The data clearly shows that the foreign exchange supply has not been as steady as one may have hoped, despite oil prices exceeding $90 per barrel. Look at our revenues and the volume of foreign exchange deposits. Nigeria doesn't claim the majority of the oil sales; we merely take a small percentage of them. It is crucial to ask where the true source of the liquidity is in this situation. The man taps.

“The CBN must be very careful because any error in their approach could push the Naira to a significantly unfavorable exchange rate,” said Kurfi Garba, managing director of APT Securities.