In a new development, The Central Bank of Nigeria (CBN) has firmly refuted recent media reports suggesting a plan to convert $30 billion in domiciliary deposits into naira.
Despite widespread speculation, alleging discussions between the Federal Government and the apex bank regarding such a conversion, the CBN has unequivocally dismissed these claims as “fake news.”
In a statement released on Saturday, the CBN urged the public to disregard these unfounded rumors, reaffirming that there are no intentions to convert the mentioned domiciliary deposits.
This swift response from the CBN comes just two days after it issued a directive to Deposit Money Banks (DMBs) to sell off their surplus dollar reserves by February 1, 2024, in a bid to stabilize the nation’s volatile exchange rate.
The CBN’s circular, titled “Harmonization of Reporting Requirements on Foreign Currency Exposures of Banks,” underscores concerns over the increasing trend of banks holding substantial foreign currency positions.
It emphasizes the need for banks to comply with prudential requirements, including the management of the Net Open Position (NOP), which assesses the disparity between a bank’s foreign currency assets and liabilities. The circular stipulates that the NOP should not exceed 20 percent short or remain at 0 percent long of the bank’s shareholders’ funds.
Furthermore, the recent depreciation of the naira in the official Nigerian Foreign Exchange Market, experiencing a 24 percent decline to close at N1,348 per dollar on Monday, further underscores the urgency for measures to stabilize the currency’s value. As such, the CBN’s swift response to dispel misinformation and its proactive directives aimed at managing foreign currency exposures within the banking sector are crucial steps in addressing the nation’s economic challenges.
