CBN Orders Banks To Sell Excess Dollars In 24 Hours

Amid its fresh moves to stabilise the nation’s volatile exchange rate, the Central Bank of Nigeria (CBN) has ordered Deposit Money Banks to sell their excess dollar stock latest February 1, 2024.

The CBN, which disclosed this in a new circular issued on Wednesday, also warned lenders against hoarding excess foreign currencies for profit.

According to officials, the central bank believes some commercial banks hold long-term foreign exchange positions to enable them profit from the volatile movements of exchange rates.

The new circular introduces a set of guidelines aimed at reducing the risks associated with these practices.

In the circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the CBN raised concerns over the growing trend of banks holding large foreign currency positions.

The latest circular came barely 48 hours after the CBN released a statement, warning banks and FX dealers against reporting false exchange rates, among others.

The circular read in part, “The Central Bank of Nigeria has noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP). This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.”