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Naira gains at official market as CBN moves to clear airlines’ forex backlog

Monday’s rate represents a 1.5 per cent appreciation from the N869.39/$1 rate the naira closed on Friday last week.

Naira gained against the United States dollar at the authorised market on Monday, data published by FMDQ showed.

According to the data, the local currency closed at N856.57 per $1 at the official market on Monday as against N869.39 recorded in the previous session last Friday.

The rate implies a 1.5 per cent appreciation from the N869.39/$1 rate it traded on Friday last week and 5.9 per cent from the N907.11 to a dollar the currency stood at the close of business last year.

On Monday, the naira commenced trading at N921.36/$ but eventually closed at N856.57 after $59.66 million was recorded as forex turnover within the business period, the FMDQ data showed.

The local currency experienced an intraday high of N720.00 and slipped to a low of N1,185 before it eventually closed at N856.57.

However, the average rate of the dollar to naira across the black market on Monday stood at N1,236 and N1,240 per dollar.

CBN influence

The gain recorded by the naira at the official market on Monday occurred amid an ongoing effort by the Central Bank of Naira (CBN) to clear the backlog of international airlines trapped in the country.

On Monday, the apex bank announced that it has disbursed about $61.64 million to the airlines through various banks as part of its efforts over the last three months to redeem outstanding forward liabilities to foreign airlines.

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According to the bank’s Acting Director, Corporate Communications Department, Hakama Sidi Ali, as of Sunday, the CBN forex settlement brings to $2 billion the total backlog cleared in three months.

Mrs Ali said the bank’s action underscores its commitment to the resolution of pending obligations while alleviating the current pressure on the country’s foreign exchange and the Naira.

She expressed the hope that the apex bank’s action would give a boost to the Naira against other currencies and further increase investor confidence in the Nigerian economy.

Trapped funds

Last November, the International Air Transport Association (IATA), the top global trade association of airlines, criticised Nigeria and other African countries for not allowing international airlines to repatriate their profits.

The group said trapped funds in African countries are currently estimated at $1.68 billion, noting that the challenge is impeding the growth and development of air transportation on the continent.

As of last August, reports indicated that foreign airlines’ funds trapped in Nigeria stood at $793 million.

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