The Central Bank of Nigeria (CBN) has issued a directive to Deposit Money Banks to sell their excess dollar reserves within 24 hours as part of efforts to stabilize the nation’s volatile exchange rate.
This directive was conveyed through a circular released by the CBN on Wednesday. CBN also cautioned banks against hoarding foreign currencies for speculative purposes.
The apex bank decision stems from concerns that some commercial banks are holding onto long-term foreign exchange positions to profit from fluctuations in exchange rates.
In response, the circular introduces guidelines aimed at mitigating the risks associated with such practices.
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The circular titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks” underscores the CBN’s growing unease over the accumulation of large foreign currency reserves by banks.
This development comes shortly after another circular, issued by the CBN just 48 hours earlier, warning banks and foreign exchange dealers against reporting false exchange rates and other irregularities.
