According to Bloomberg, Nigeria's Finance Minister, Adebayo Olawale Edun, has stated that the continuous depreciation of the naira is primarily due to approximately $6.8 billion in outstanding forward payments in the foreign exchange market. Edun emphasizes that resolving this issue is vital for stabilizing the local currency.
Edun further explained that once these unpaid contracts are resolved, it could strengthen the value of the naira and create opportunities for more foreign exchange inflow.
The Nigerian naira has been steadily decreasing in value over the past few months.
Yesterday, in the parallel market for currency exchange, the Nigerian naira came close to reaching the 1000 naira per US dollar mark.
The reason behind this depreciation is the central bank's inadequate supply of dollars to this specific market.
The issue we have now is that the market is not liquid enough, “We are committed to encouraging liquidity based on reforms that have been made at the moment, on the fiscal side and the monetary side. And together with the restoration of trust and confidence, we think the FX flows will return,” Edun, who accompanied President Bola Tinubu to New York for the United Nations General Assembly, said in a recent interview there
Yesterday, the Central Bank of Nigeria had to reschedule their Monetary Policy Committee meeting due to the FX market crisis. Some speculate that the meeting delay is connected to the new leadership changes in the apex bank.
President Tinubu has appointed Olayemi Cardoso as the new CBN governor, and the acting governor and four deputy governors have resigned, creating a gap in decision-making. The central bank's passive stance has resulted in a shortage of dollar supply through official channels.
The naira's value has rapidly dropped from around 900 naira per dollar since the beginning of September due to the scarcity of dollars from the central bank. People are now forced to find foreign currency through unofficial channels.
Nigeria, being the largest economy in Africa, is dealing with its highest inflation rate in over 18 years. Economists are projecting a possible interest rate hike by the central bank, but the timing remains uncertain due to the postponed meeting without a rescheduled date.