No Plans To Convert $30bn Domiciliary Deposits To Naira – CBN
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The Central Bank of Nigeria (CBN) on Saturday said there is no plan to convert $30bn domiciliary deposits to naira.
A report had indicated that the Federal Government and the apex banks were considering the conversion of foreign currencies in domiciliary accounts of citizens to naira to stabilise Nigeria’s currency, which earlier this week recorded its worst performance in history.
However, the apex bank dismissed the report as “fake news” in a post on Saturday, urging the public to disregard such speculations.
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“No plans to convert $30bn domiciliary deposits to naira. This news is fake!,” the post reads.
The apex bank’s reaction comes two days after it ordered Deposit Money Banks (DMBs) to sell their excess dollar stock latest February 1, 2024, as part of moves to stabilise the nation’s volatile exchange rate.
The CBN had a circular released on Wednesday warned lenders against hoarding excess foreign currencies for profit.
In the circular titled, “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks”, the apex bank raised concerns over the growing trend of banks holding large foreign currency positions.
The apex bank had earlier warned banks and FX dealers against reporting false exchange rates, among others.
The CBN accused banks of holding excess foreign exchange positions. It gave lenders until February 1, 2024 to sell off excess dollars in their vault.
“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,” the circular read.
The CBN also issued prudential requirements that banks must follow. A key focus of these requirements is the management of the Net Open Position (NOP) which measures the difference between a bank’s foreign currency assets (what it owns in foreign currencies) and its foreign currency liabilities (what it owes in foreign currencies).
The circular mandates that the NOP must not exceed 20 per cent short or 0 per cent long of the bank’s shareholders’ funds.
On Monday, the naira recorded its biggest fall in the official Nigerian Foreign Exchange Market, depreciating by 24 per cent to close at N1,348 per dollar.
