CBN Takes Action Against Banks for Withholding $5 Billion Amidst Naira Depreciation
The Central Bank of Nigeria (CBN) hit the nail on the head yesterday.
It accused commercial banks of hoarding over $5 billion in foreign currencies against the threshold approved by the apex bank.
At the close of the market yesterday, the naira exchanged N1,450/$ at the parallel market.
It was a substantial gain (N70) against the dollar, having closed on Wednesday at N1, 520/$.
Erring banks have till Thursday by the CBN.
“Consequently, the CBN has mandated these banks to release any excess foreign currency they hold to individuals and businesses in need of foreign exchange by today’s deadline.
Failure to comply with this directive will result in sanctions in accordance with existing rules and regulations.
To show how serious the CBN is about this directive, the official said that “teams of examiners have been deployed to all commercial banks heavily engaged in FX transactions to monitor compliance with the directive.
What the CBN is saying with this new circular is that you cannot hold excess dollar liquidity again.
The approach is seen as a positive step towards easing the pressure on the naira and promoting a more favourable exchange rate.
On the other hand, some financial institutions, the source said, “are cautious about revealing their exact dollar reserves and are treading carefully before fully complying.
Their hesitation might stem from concerns about potential disruption to their operations and the potential impact on their customers.
