No Plans to Make $1 Equal N1.25, CBN Says, Warns Commercial Banks About Spending FX Gains Recklessly

No Plans to Make $1 Equal N1.25, CBN Says, Warns Commercial Banks About Spending FX Gains Recklessly

  • The Central Bank of Nigeria has denied reports that it is planning a policy that could make the naira at par with the dollar
  • The bank reacted to a viral social media report that it plans to make $1 equal N1.25
  • The bank, however, asked commercial banks not to be reckless in spending their FX gains on dividend payment

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, Social media
Acting Governor of the Central Bank of Nigeria, Folashodun Shonubi Credit: @Nairarates
Source: Getty Images

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.

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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.

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It said forbearance should apply to existing facilities as of the policy's effective date. 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.

CBN orders debit of debtors' accounts as GTB, First Bank, 2 others record N478 billion in bad loans reported that about four banks in Nigeria recorded N478 billion in non-performing loans during the first half of 2023, results from their financial records show.

Guarantee Trust Bank Holding, FBN Holding, and two others reported about N478.93 billion in non-performing loans in the half-year ending June 2023.

The figure represents almost 16% of N413 billion reported in the year ending December 31, 2022.


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