The Central Bank of Nigeria (CBN) has introduced new guidelines for Deposit Money Banks (DMBs) regarding the deposit of foreign currency notes. This directive, issued by the Director of Currency Operations, Mohammed Solaja, was posted on the CBN’s website on Friday.
According to the circular, each bank is allowed to deposit a maximum of $10 million daily in USD 100 and USD 50 notes at the CBN branches in Abuja and Lagos. This measure aims to deepen the foreign exchange market, boost liquidity, and achieve convergence between the parallel and official market exchange rates.
“In order to deepen the foreign exchange market, boost liquidity and attain convergence in the exchange rates of the parallel and official markets, the Central Bank of Nigeria (CBN) has approved that DMBs may deposit their excess foreign currency notes with Lagos and Abuja branches of the bank,” the circular read.
The approval responds to the growing demand from DMBs to deposit their forex cash with the CBN for onward credit to their offshore accounts with correspondent banks. The circular, referenced as COD/DIR/INT/CIR/001/016, mandates that DMBs notify the CBN in writing of their intention to make such deposits at least three working days prior.
Additionally, the CBN has set a limit for smaller denominations, allowing deposits of $1 million daily for notes of $20 and below.
This strategic move is expected to enhance the efficiency of the foreign exchange market, ensuring that the DMBs can manage their foreign currency liquidity more effectively while supporting the stability and convergence of exchange rates in Nigeria.
