The Central Bank of Nigeria (CBN) has issued a directive to banks, instructing them to adhere strictly to recent foreign exchange (FX) policy reforms.
This communication was relayed today through a letter addressed to banking institutions and signed by Dr. Adetona Adedeji, the Acting Director of Banking Supervision at the CBN.
The directive comes as a reinforcement of the apex bank’s stance on prudent financial management and risk mitigation, which was emphasized last year.
In particular, the CBN reiterated its previous instruction for banks to exercise utmost prudence and to set aside foreign currency revaluation gains as a counter-cyclical buffer.
This measure aims to cushion any adverse movements in the foreign exchange rate.
In the letter, the CBN stated, “Banks are required to exercise utmost prudence and set aside Foreign Currency (FCY) revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.”
Furthermore, the directive explicitly prohibits banks from utilizing such FX revaluation gains to pay dividends or cover operating expenses.
This directive underscores the CBN’s commitment to maintaining stability and resilience in Nigeria’s foreign exchange market.
By enforcing prudent financial practices among banks, the CBN aims to mitigate risks and enhance the overall stability of the economy.
Banks are urged to adhere strictly to these guidelines and to ensure full compliance with the CBN’s directives.
The CBN emphasizes the importance of these measures in safeguarding the integrity of Nigeria’s financial system and promoting sustainable economic growth.
In conclusion, banking institutions are urged to take heed of the CBN’s directive and to implement necessary measures to comply with the foreign exchange policy reforms effectively.
