Nigeria’s central bank announced limits on how much banks can hold in foreign currencies on Wednesday and expressed concern about the growth of forex exposures on their balance sheets after the local currency tumbled against the U.S. dollar.

Nigeria’s currency fell to a record low on the official market on Tuesday, slipping below the unofficial parallel market rate, after market regulator FMDQ Exchange changed its closing rate calculation methodology for the naira.

Its dollar-denominated sovereign bonds also suffered sharp falls.

According to a Reuters report the central bank has introduced a limit on lenders’ net open positions of 20% of shareholders’ funds for short positions and a zero limit for long positions and ordered banks to harmonise reporting, the monetary authority said in a circular on Wednesday.

In the past, lenders were not allowed to have open positions on the dollar, meaning they could not buy foreign exchange on their own account from the market or speculate on the value of the currency.

It asked them to bring their exposures within the set limits immediately, meaning that banks would have to sell down or face sanctions including suspension from the currency market.

Before Nigeria’s currency woes, lenders could use their open net positions on foreign currency to finance short-term trade lines without resorting to the central bank for bidding.

That effectively let banks “make the market” for dollars and provide two-way quotes for buying and selling the currency, creating a fully functioning forex market.

The central bank said lenders will be required to have liquid foreign assets to cover maturing foreign currency obligations and asked banks to also have a foreign exchange contingency funding arrangement with other institutions.

https://businessday.ng/business-economy/article/nigerias-central-bank-caps-amount-banks-can-hold-in-fx-as-naira-rout-worsens/

The way the naira is falling eh... O ni agbara

Nawao…God help us.

They leave Government they attack PO for showing empathy. Una need evidence to show that there are people in this forum that doesn’t want progress of Nigeria.

The CBN governor should be sacked. Get a competent hand!!!.

Paraman:
The way the dollar is falling eh... O ni agbara

Which dollar is falling
If dollar is falling, your Naira must be sinking.

They are just waking up to commonsense measures that should have been taken since.

Nigeria is the only developing country with potential for greatness, that still allows citizens to be holding foreign currency in their local bank account, and allow the free trading of foreign currency in every road side kiosk.

By now, all domiciliary accounts should have had limitations of $10,0000, that should have a 3months limit to liquidate to below $2000 once foreign remittance has ceased.

And prohibit all transfers between Nigerian domiciliary accounts, such that the funds can only be exchanged by the bank hosting the account.

Like the mandate thief that hired him, Cardoso is just clueless. One Nairalander said he's an olodocrat, not a technocrat. 😁😁😁😁

Hi

All these kindergarten approaches can't work

bennybuhari:
All these kindergarten approaches can't work

What will work?
I think automatic conversion of all dollars in dom account to naira. Once you need it again, it will be converted back to dollars at current exchange rate. Maybe by then, people will be working towards a stronger naira
And making of robbing people with dollars at home legal.

Empty grammar from cbn