The Central Bank of Nigeria, CBN has taken a key step towards stabilising the naira by clearing outstanding foreign currency forwards owed to several commercial banks.
The minister of finance, Wale Edun, had earlier linked the continued decline in the value of the naira to overdue forward payments of about $6.8 billion.
Edun had also recently announced that Nigeria was expecting $10 billion of inflows to improve liquidity in the FX market adding that the development would come as a relief to local lenders who have been struggling to supply to businesses and individuals alike as Nigeria faces one of its worst dollar shortages.
According to Edun, the naira was bound to recover once the overdue contracts are settled, as it would improve foreign exchange inflows to the forex market.
It is reported that three banks, Citi Bank, Stanbic IBTC and Standard Chartered Bank received full payment of debts owed.
Confirming the development, Citi bank in a statement informed it's customers that the CBN has cleared all outstanding matured forex.
"Dear Valued Client, We have been directed to inform you that the CBN has delivered all outstanding matured forward forex. We thank you for your patience & cooperation, and value you for your business and partnership.
Please speak with your Relationship Manager or your Trade Service Professional for clarification and additional details," Citi bank stated.
Reuters however, quotes the CBN spokesperson, Isa Abdulmumin as saying that about 14 banks have benefited from the repayments so far.
"The CBN has started paying the FX backlogs to banks. So far, 14 banks have been paid," the CBN spokesperson told Reuters but declined to give the amount or reveal the identity of the banks.
Other sources who spoke with Reuters also said the affected banks got payments of about $1 billion. Some of the banks got their full payments while others got as much as 80% of the backlog. The sources, however, said the payments would continue in the next few weeks.
The update has influenced the Nigerian foreign exchange market as the naira has just increased to ₦1,120 against the dollar.
The naira appreciated by ₦50 or 4.27% compared to the amount traded on Wednesday - ₦1,170.
The CBN governor, Yemi Cardoso has said the apex bank will give priority to clearing the backlog but failed to mention how long the repayment would take.
The development came barely 24 hours after the chairman of Air Peace alleged that the Central Bank of Nigeria owes his firm $24 million, six months after lodgment amid the foreign exchange crisis.