Nigerians May Face Price Reduction of Goods as CBN Prepares to Settle Dollar Debts with Banks

Mubashir Shehu

1 year ago

Nigerians May Face Price Reduction of Goods as CBN Prepares to Settle Dollar Debts with Banks

In a recent announcement, the Acting Governor of the Central Bank of Nigeria, Folashodun Shonubi, stated that the apex bank is on track to repay all outstanding forward contract debts to banks within the next one to two weeks. While the total amount of these outstanding dollar debts remains undisclosed, a report by JPMorgan estimated the figure at $6.84 billion.

Shonubi also addressed the JPMorgan report, dismissing it as an opinion without concrete basis. He clarified that discussions with banks have been ongoing for some time, and the forward contract debts are set to be repaid in the near future.

Shonubi emphasized, “There is no outstanding $7 billion as claimed by JP Morgan. It was just their opinion that was put on paper, and many people jumped on it.”

The Central Bank of Nigeria has been actively working with banks to clear these backlogs and ensure that foreign exchange is made available to those in need upon maturity. Shonubi highlighted, “We are discussing with them so we can structure their own. So, we are working towards clearing them in the next one or two weeks. It is something we have been discussing for a while.”

Furthermore, the CBN governor mentioned that the central bank is currently investigating Crown Agent, a Bureau De Change operator, for illegally bringing forex into the country and selling it to Nigerians at rates lower than the official rate. The CBN is determined to take action against all BDC operators found engaging in such activities.

He warned, “They can expect to hear from us shortly. And they will not be the only ones.”

Despite contributing less than 25 percent of the market volume, the CBN remains committed to stabilizing exchange rates and intervening in the market to ensure rate stability. Shonubi emphasized that the CBN’s intervention goes beyond regulatory oversight and aims to balance the supply of foreign exchange to the financial sector.

“Today, we are still intervening in the market. It is not as if it has affected our ability to make money available in the I&E market. When you look at the volumes, the CBN contributed less than 25 percent,” he explained.

This ongoing commitment by the Central Bank of Nigeria is aimed at stabilizing the foreign exchange market and, ultimately, benefiting the Nigerian economy.

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