Latest CBN News and Dollar to Naira Update Today 14 September 2023 can be accessed below.
Stay updated with the latest CBN directives and Naira to Dollar exchange rates as of September 14, 2023. Get insights into banking sector regulations and discover how the Naira is performing against the Dollar.
Here are the latest updates on the Central Bank of Nigeria (CBN) and the Dollar to Naira exchange rate for today, September 14, 2023:
Dollar to Naira Update Today
Naira Depreciates to N950 per Dollar Amid Scarcity
On Wednesday, the Nigerian naira experienced a significant depreciation, reaching N950 per US dollar at the parallel foreign exchange (FX) market. This marks a notable decline of N40 when compared to the exchange rate of N905 recorded on August 23.
Causes of Depreciation
Currency traders, specifically Bureaux De Change operators (BDCs), in the Ikeja area of Lagos attributed this depreciation to the scarcity of the US dollar. According to them, the buying price of the dollar reached N940, while the selling price was N950, resulting in a profit margin of N10.
A BDC operator named Shehu revealed that even some Nigerians are facing difficulties in withdrawing forex from banks. Despite the Central Bank of Nigeria (CBN) lifting the ban on the sale of forex to BDC operators, the banks are reportedly not selling forex to the BDCs.
Official Market Rates
In contrast, at the official market, the naira closed at N742.10 on the previous day, according to data from FMDQ Securities Exchange, the platform overseeing official foreign exchange trading in Nigeria. The market opened at N761.24 to the dollar, with a high of N807.15 and a low of N738 during the trading session. A total of $42.26 million was traded in foreign exchange at the official investors’ and exporters’ window (I & E) window.
On the same day, the Central Bank of Nigeria (CBN) stated that a review of the change in the FX regime indicated that banks could profit significantly from the potential increase in the naira value of banks’ foreign currency (FCY) assets and liabilities. As a result, the CBN directed deposit money banks (DMBs) to cease using gains from the revaluation of the naira to pay dividends or finance their operations.
The depreciation of the naira in the parallel market highlights the challenges faced by Nigeria’s foreign exchange system and the ongoing efforts to address them.
CBN Restricts Banks from Using Naira Devaluation Gains
The Central Bank of Nigeria (CBN) has issued a directive instructing deposit money banks (DMBs) to refrain from using the gains obtained from the revaluation of the naira for dividend payments or operational funding. This decision follows a review of the recent changes in the foreign exchange (FX) regime, which revealed that banks had the potential to profit significantly from the policy by increasing the naira value of their foreign currency (FCY) assets and liabilities. The directive, contained in a letter titled ‘Impact of Recent FX Policy Reforms: Prudential Guidance to the Banking Sector,’ was dated September 11, 2023.
Naira Declines to N773.50 Per Dollar
The Nigerian naira experienced a notable decline, opening on a negative note with an approximately 7.1% drop in the formal market. It closed at N773.50 per dollar at the Investors and Exporters (I & E) window, a significant decrease from N736.62 in the previous session. The open indicative rate was recorded at N771.49 per dollar. During the day’s trading, the highest spot exchange rate reached N804.15 per dollar before settling at N773.50. The naira also reached a low of N722.39 per dollar, with a total turnover of $37.86 million.
New CBN Circular Prevents Banks from Utilizing Forex Revaluation Profits
In a bid to fortify the Nigerian banking sector amidst volatile foreign exchange rates, the CBN has issued a fresh circular that bars banks from recklessly spending profits derived from forex revaluation. Many Nigerian banks reported substantial profits in their half-year results, largely attributed to the depreciation of the naira following the unification of exchange rate windows. The CBN has expressed concerns that banks might be tempted to utilize these profits, thereby rendering them vulnerable if the exchange rate strengthens. The circular mandates banks to set aside their foreign currency revaluation gains as counter-cyclical buffers, which cannot be used for dividend payouts or operating expenses.
Fact Check: Altered Video Falsely Claims Tinubu’s Currency Plans
A video circulating on TikTok purportedly shows President Bola Tinubu discussing plans to “abolish” Nigeria’s currency, the naira, in favor of the dollar. However, this claim is unequivocally false. Investigations reveal that the video was digitally manipulated, and there is no authentic video or statement from President Tinubu regarding such plans. Furthermore, Arise News has officially distanced itself from the video, categorically stating that it is a deep fake video fabricated by purveyors of fake news.
Please note that these reports provide information as of the date mentioned, and the currency exchange rates can fluctuate rapidly.