THE CENTRAL BANK OF NIGERIA ADDRESSES CLAIMS OF INTENT TO CONVERT $30 BILLION IN DOMICILIARY ACCOUNTS TO NAIRA.

The Central Bank of Nigeria (CBN) has refuted claims of any intentions to convert $30 billion deposits in domiciliary accounts to naira, dismissing the statement as untrue.

An article on Saturday had suggested that the apex bank was contemplating a policy shift to transform foreign currencies in the domiciliary accounts of citizens into Naira, with the aim of enhancing liquidity in the FX market.

As per the report, a source purportedly revealed that the government would mandate the conversion of foreign currencies held in the domiciliary accounts of both individuals and corporate entities to naira, at a rate determined by the CBN.

However, the CBN took to its official channel on Saturday to disprove the report, labeling it as fake news.

In recent times, there have been speculations regarding the vulnerability of dollar-denominated deposits of individuals, prompted by the CBN’s efforts to normalize the foreign exchange (FX) market.

On January 31, 2024, the CBN instructed banks to sell dollars to mitigate potential losses. The directive emphasized that the net open position (NOP) limit for the overall foreign currency assets and liabilities of banks should not exceed “20% short or 0% long of shareholders’ funds.”

This decision by the apex bank was driven by concerns about the escalating foreign currency exposures of banks through their NOPs. Additionally, the regulatory body eliminated the allowable limit of exchange rates quoted by international money transfer operators (IMTOs) and directed them to use prevailing market rates in Nigeria’s FX market.

Following the implementation of these policies, the naira appreciated on February 2, 2024, in the official section of the FX market, closing at N1,435 per dollar.

Source: Techeconomy

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