more on CBN &FX So, if the CBN fails to deliver, it means those companies will not be able to deliver FX to its offshore bank for importation of goods. When there is a default, the cost on that transaction will increase and that may affect the bottom-line. It could also mean that subsequently, those companies may not be able to access such transactions or credit, as confidence would have been eroded”, said an analyst who pleaded anonymity.#BinanceSquare

In his opinion, Uche Uwaleke, professor of Capital Market at the Nasarawa State University Keffi, said FX forwards is a binding contract between two parties to deliver FX in the future at an exchange rate agreed to in advance.$BTC $BNB $USDC

“Failure to settle or deliver FX forward on the agreed date amounts to breach of contract and could lead to litigations and loss of confidence, which are capable of scaring investors,” he said.#fx

Abiodun Keripe, managing director, Afrinvest Research & Consulting, said the major nexus is the dependence of the economy on key imports across sectors.

“Take for instance, there are material items required for infrastructure and manufacturing projects such as iron and steel which manufacturers have to import. The Ajaokuta steel mill is non-functional until date. Where manufacturers and importers have locked their FX demands through forwards, and settlements are delayed, it results in the inability of importers to fulfil their obligations as at when due. Also, it creates a negative perception from the view of our trading partners” he said.

Some estimates put the FX backlog at between $6 and $10 billion, which equates to less than 10 percent of the country’s external reserves.

Data from JPMorgan Chase & Co. compiled by FSDH Research showed that FX forwards stood at $6.8 billion (N3.2 trillion) as of 2022.