CBN Clarifies Position on Converting Foreign Currency in Domiciliary Accounts to Naira
- The Central Bank of Nigeria (CBN) has said it did not restrict domiciliary account holders from converting their funds to naira
- The bank disclosed that all conversions must be fully disclosed and reported as part of the bank’s exchange rate requirements
- CBN’s new guidelines allow foreign currency holders in the diaspora and Nigeria with offshore accounts full access to trade-eligible currencies
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
The Central Bank of Nigeria (CBN) has issued new rules clarifying that commercial, merchant and non-interest banks (CMNIBs) should let holders convert their Internationally Tradable Foreign Currency (ITTC) balances in designated domiciliary accounts into the local currency, the naira at any time, using the prevailing exchange rate.
The bank disclosed that all conversions must be fully disclosed and reported as part of the bank’s exchange rate requirements.
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No restrictions on converting forex into naira
Legit.ng reported that in February 2024, the apex bank reaffirmed that it would not coerce domiciliary account holders to convert their holdings into naira.
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The new guidelines allow foreign currency holders in the diaspora and Nigeria with offshore accounts full access to trade eligible currencies.
According to the CBN, foreign currencies in domiciliary accounts held in offshore accounts by Nigerians in the diaspora, at home in cash or otherwise, or retained in electronic form can be traded.
The announcement comes as the bank released the Guidelines on Implementing the Foreign Currency Disclosure, Deposit, Repatriation, and Investment Scheme 2024, based on Executive Order 15 issued in 2023, to improve the oversight of foreign exchange assets held by Nigerian residents.
CBN’s new guidelines to boost transparency
BusinessDay reports that the directives aim to boost transparency, streamline foreign currency management in Nigeria and reinforce the apex bank’s commitment to a structured and participant-friendly regulatory framework for FX.
Per the guidelines, CMNIBs are expected to comply with a series of requirements for handling ITFC under the initiative.
A previous report by Legit.ng shows that part of the critical directives is for banks to open designated domiciliary accounts for participants, via which they can process conversions of ITFC into naira without restrictions on withdrawals or investment terminations.
Steps to opening domiciliary accounts
The banks must collect detailed data from applicants, including the Bank Verification Number (BVN), National Identification Number (NIN), Tax Identification Number (TIN), and the specific amount of ITFC to be deposited.
It stated that interest rates on uninvested domiciliary account balances must follow the guidelines. It also said that banks can trade with uninvested ITFC balances, provided they are available upon the participant’s request.
Also, CMNIBs must issue receipts within 24 hours of deposits, acknowledging the funds’ origin and confirming receipt for the scheme.
CBN hikes exchange rates for importers
Legit.ng earlier reported that the CBN had adjusted the Nigeria Customs exchange rates to clear goods by air and seaports.
The development followed the US dollar’s rebound against major currencies following the presidential election victory of Donald Trump.
The US dollar rose substantially against several other major currencies as Donald Trump won the presidential election.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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