CBN Mandates Banks To Liquidate Excess Dollars Within 24 Hours

In its latest efforts to stabilize the country's fluctuating exchange rate, the Central Bank of Nigeria has directed Deposit Money Banks to liquidate their surplus dollar reserves by February 1, 2024.

The Central Bank of Nigeria, in a recent circular issued on Wednesday, revealed its stance and cautioned financial institutions against retaining surplus foreign currencies for financial gain. Officials assert that the central bank suspects certain commercial banks are maintaining extended foreign exchange positions to capitalize on the unpredictable fluctuations in exchange rates.

The recently issued circular outlines a series of guidelines designed to mitigate the risks associated with such practices.

Entitled "Harmonization of Reporting Requirements on Foreign Currency Exposures of Banks," the circular from the Central Bank of Nigeria expresses apprehension about the increasing prevalence of banks maintaining substantial foreign currency positions.

This latest circular follows closely, within 48 hours, after another circular from the CBN cautioning banks and foreign exchange dealers against the dissemination of inaccurate exchange rates, among other concerns.

The recent development also coincided with the modification of the methodology employed in determining the official exchange rate of the nation by the FMDQ Exchange.