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Central Bank of Nigeria Issues Deadline for Banks to Offload $5 Billion Excess Dollar Stock

February 1, 2024

Photo Credit: Ayekooto

 

In a bid to stabilize the nation’s exchange rate, the Central Bank of Nigeria has directed Deposit Money Banks to divest their surplus dollar holdings by February 1, 2024. The move aims to curb the practice of hoarding foreign currencies for profit, as some commercial banks are believed to hold substantial long-term foreign exchange positions. The new circular, titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,” introduces guidelines to mitigate the risks associated with this trend.

The directive comes shortly after a warning issued by the CBN against false exchange rate reporting by banks and FX dealers. Additionally, the FMDQ Exchange recently adjusted the methodology for calculating the nation’s official exchange rate.

The CBN emphasizes that banks must demonstrate a valid commitment for any foreign exchange they hold, be it tied to a transaction or obligation. By enforcing the offloading of excess dollars, the central bank aims to inject liquidity into the market, stabilizing the exchange rate and attracting foreign investors.

 

Credit: Ayekooto/X

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