'No plans to make $1 equal N1.25' - CBN says, warns commercial banks about spending FX gains

The Central Bank of Nigeria (CBN) has denied viral social media reports saying it plans to introduce a new foreign exchange policy to make the naira equal to the US dollar.

CBN made the denial on its Twitter page as it reacted to the report on Wednesday, September 13, 2023.

CBN issues stern directives to banks on FX

"The Central Bank of Nigeria would like to bring to your attention that the attached message currently circulating on social media is false and should be disregarded," it wrote while flagging the fake news.

However, on Monday, September 11, 2023, it instructed commercial banks not to use the foreign exchange revaluation gains made from the 60% naira devaluation to pay dividends or other operational costs.

The apex bank issued the directive in a circular to all banks dated September 11, 2o23, and signed by its Director of Banking Supervision Department, Haruna Mustafa.

It said the banks could save the money from forex revaluation as a buffer against future volatility. The circular reads: "Banks must exercise utmost prudence and set aside the foreign currency (FCY) revaluation gains as a counter-cyclical buffer to cushion any future adverse movements in the FX rate.

In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses."

Per the financial institution's regulator, any bank that breaches the Single Obligor limit due to the Forex Policy will be given forbearance upon application.

It said forbearance should apply to existing facilities as of the policy's effective date. Legit.ng reported that the directive comes as Guaranty Trust Holding Company, Fidelity Bank and FCMB saw their Forex income soar to N390.5 billion in the first half of 2023, while FCMB grew its FX income by 65.2% to N921.78 million.