The Central Bank cracks down on banks and orders them to sell excess dollars in 24 hours.

Thursday, February 1, 2024 – The CBN has issued a new circular on reporting foreign currency exposure to all banks to curb forex speculation & risk mitigation.

In several guidelines, the Central Bank seeks to address suspected cases of excessive foreign currency speculation while highlighting its concerns over the growing trend of banks holding large foreign currency positions.

“The CBN has noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP).”

“This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange & other risks.”

The circular instructed the banks that the NOP limit of the overall foreign currency assets & liabilities, taking into cognizance both those on & off-balance sheet, should not exceed 20% short or 0% long of shareholders’ funds unimpaired by losses using the gross aggregate method.