Nigeria's central bank said on Wednesday it has cleared all of its verified foreign exchange backlog by paying commercial bank customers $1.5 billion to settle outstanding obligations that put the local currency under pressure.
The central bank, under Governor Olayemi Cardoso, made backlog clearing part of its strategy to stabilise the naira, which has hit record lows against the US dollar and fueled inflation, hurting the economy.
Cardoso inherited an estimated $7 billion backlog and commissioned an independent audit which found some of the claims lacked proper documentation and were hence invalid.
The backlog built up after Nigeria introduced controls in 2017 to keep the currency artificially strong when the price of oil, a major export, was low.
Dollar supply
"This encumbrance to market confidence in the country's ability to meet its obligations is now totally behind us," Cardoso said in a statement.
Only legitimate transactions were settled after independent auditors vetted them, while invalid ones were referred to authorities for further scrutiny, central bank spokesperson Hakama Sidi Ali said in the statement.
Cardoso has held calls with foreign portfolio investors to set expectations for Nigeria's reserves and dollar supply in the local currency market.
The bank said its dollar reserves rose by almost $1 billion to $34.11 billion as of March 7, an eight-month high, on remittances from Nigerians abroad and foreign investors buying government bonds.
