Nigeria anticipates the inflow of $10 billion in foreign currency over the next few weeks to alleviate the liquidity constraints in the foreign exchange market, which have hampered growth in Africa’s largest economy, according to Finance Minister Wale Edun.
The West African nation has grappled with persistent dollar shortages, a consequence of foreign investors exiting local assets during a period of low oil prices. The return of these investors has been sluggish, and the central bank has yet to address pending requests for dollars from foreign investors looking to repatriate funds or airlines attempting to remit revenue from international ticket sales.
Consequently, some businesses and individuals have resorted to the black market, where the naira currency has continually reached new lows, exacerbating the disparity with the official exchange rate.
Edun revealed that President Bola Tinubu signed two executive orders on Thursday. These orders permit the domestic issuance of instruments in foreign currency and authorize the transfer of all cash held outside the banking system into banks.
Edun stated, “There is a line of sight on $10 billion worth of inflow of foreign exchange in a relatively near future, in weeks rather than months.” He emphasized that liquidity would also derive from crude sales by the state oil firm and foreign investment firms willing to invest in Nigeria. He expressed optimism, stating, “These measures taken as a whole and comprehensively should lead to the flow of foreign exchange.”
On Monday, the naira depreciated to a record low of 1,200 per dollar on the black market, just two days after it reached a new low of nearly 1,000 naira on the official market.
Addressing the business conference, President Tinubu affirmed that all forward contracts made by the government would be honored. The Central Bank of Nigeria’s governor echoed this sentiment, emphasizing that the currency would adjust once market participant rules were clarified.