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CBN Denies Plans To Convert $30bn Domiciliary Deposits To Naira

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The Central Bank of Nigeria (CBN) has denied planning to convert $30 billion deposits in domiciliary accounts in the country to naira.

A report in one of the media outlets on Saturday quoted a source as saying that the government plans to introduce a policy that will lead to the conversion of foreign currencies in domiciliary accounts of individuals and corporate organisations to naira at a rate to be determined by the CBN as part of measures to increase liquidity in the foreign exchange market and stabilise the naira value that has suffered historic depreciation in recent times.

READ ALSO: Naira Depreciation: ‘CBN’s New Measure Will Ease Forex Pressure’

The report quoted the source as saying that there is over $30 billion in domiciliary accounts of individuals.

However, the CBN, in a post on its official X handle on Saturday, debunked the report, describing it as fake news.

“No plans to convert $30bn domiciliary deposits to naira. This news is fake!” the apex bank said.

subsequently, the bank in a statement signed by its Acting Director, Corporate Communication, Sidi Ali Hakama,  such falsehood is capable of causing panic in the foreign exchange market which it has been working very hard to stabilise.

“This allegation is absolutely false and aims to trigger panic in the foreign exchange market, which the CBN is working assiduously to stabilize, as evidenced by its recent work and policy directions,” a part of the statement read.

The bank further said that “similar false narratives have been spread on the work of the CBN over the past few months and it is clear that vested interests are determined to sabotage our efforts.”

“We want to assure the general public that CBN is working to build confidence and would never do anything to undermine the currency and the economy.

“We, therefore, urge all stakeholders to disregard stories aimed at causing panic in the system and see them clearly for what they are – acts of national sabotage.

“We wish to advise, in the strongest terms, against the peddling of false reports that have the potential to be disruptive to the economy. The Bank is the only designated authority for monetary policy changes and will always advise on any policy change(s) before they are brought into operation.

“The CBN is always open to answer questions about our policies,” the statement added.

The naira fall has pushed the CBN to tinker measures to address pressure in the foreign exchange market.

The CBN had on January 31, issued a circular indicating that there is growth of foreign currency exposure of banks through their Net Open Position (NOP) and such exposes them to foreign exchange and other risks.

It, therefore, directed all deposit money banks, whose current NOP exceeds the limit to dispose of foreign currencies within 24 to prevent losses.

“The Net Open Position (NOP) limit of the overall foreign currency assets and liabilities taking into cognizance both those on and off-balance sheet should not exceed 20% short or 0% long of shareholders’ funds unimpaired by losses using the Gross Aggregate Method.
“Banks whose current NOP exceed 20% short and 0% long of their shareholders’ funds unimpaired by losses are required to bring them to a prudential limit by February 1, 2024,” the CBN had stated.

In another circular, the apex bank also removed the allowable limit of exchange rate quoted by the international money transfer operators (IMTOs) and directed IMTOs to use prevailing market rates in Nigeria’s FX market.

These measures are seen by analysts as a way of boosting liquidity in the foreign market.

The naira recorded an all-time low of N1,482.57 /$1 at the official exchange window on Tuesday, but began recovery, closing the week at N1,435.53/$ on Friday.

Analysts have attributed the marginal value appreciation of the local currency recorded on Friday to the latest policies adopted by the CBN.

Correspondent at Prime Business Africa | + posts

Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.

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