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LequteMan
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The Central Bank of Nigeria has barred commercial banks in the country from holding any part of their funds in the United State dollars as it steps up the battle to reduce pressure on the Naira.
In a circular signed by Mr. Olakanmi Gbadamosi, the Director, Trade Exchange, CBN, on Wednesday, the apex bank ordered banks to stop keeping one per cent of their shareholders’ funds in dollars as foreign exchange trading position at the close of each business day.
“The CBN has observed the recent development in the foreign exchange market and its consequences on the stability of the exchange rate. In order to preserve the stability of the market, the foreign exchange trading position of individual authorised dealer, which is currently at one per cent of its shareholders’ fund unimpaired by losses, has been temporarily reviewed downward to zero per cent with immediate effect.
“Consequently, authorised dealers are therefore required to maintain zero per cent of their shareholders’ fund as foreign exchange trading position at the close of each business day. Any infraction of the requirement of this circular, in any way whatsoever, will attract appropriate sanctions, which may include suspension from the foreign exchange market.”
The move, according to the CBN, is meant to reduce the volatility being experienced in the naira-dollar exchange rate.
The CBN believes commercial banks are contributing to the continued fall of the naira by speculating against the naira through their dollar stocks.
CBN Governor, Mr. Godwin Emefiele, reiterated that the central bank was not going back on the latest decision.
“We do not want speculators in this market any longer. The banks are not supposed to hold any funds (in dollars) of their own. They are supposed to buy and sell currency on behalf of customers,” he said.
In a related development, the CBN on Thursday asked banks and members of the general public, who purchase dollar at the interbank forex market, to ensure that they utilised it within 48 hours.
#Nigeria #CBN
In a circular signed by Mr. Olakanmi Gbadamosi, the Director, Trade Exchange, CBN, on Wednesday, the apex bank ordered banks to stop keeping one per cent of their shareholders’ funds in dollars as foreign exchange trading position at the close of each business day.
“The CBN has observed the recent development in the foreign exchange market and its consequences on the stability of the exchange rate. In order to preserve the stability of the market, the foreign exchange trading position of individual authorised dealer, which is currently at one per cent of its shareholders’ fund unimpaired by losses, has been temporarily reviewed downward to zero per cent with immediate effect.
“Consequently, authorised dealers are therefore required to maintain zero per cent of their shareholders’ fund as foreign exchange trading position at the close of each business day. Any infraction of the requirement of this circular, in any way whatsoever, will attract appropriate sanctions, which may include suspension from the foreign exchange market.”
The move, according to the CBN, is meant to reduce the volatility being experienced in the naira-dollar exchange rate.
The CBN believes commercial banks are contributing to the continued fall of the naira by speculating against the naira through their dollar stocks.
CBN Governor, Mr. Godwin Emefiele, reiterated that the central bank was not going back on the latest decision.
“We do not want speculators in this market any longer. The banks are not supposed to hold any funds (in dollars) of their own. They are supposed to buy and sell currency on behalf of customers,” he said.
In a related development, the CBN on Thursday asked banks and members of the general public, who purchase dollar at the interbank forex market, to ensure that they utilised it within 48 hours.
#Nigeria #CBN
