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The Federal Government is contemplating a significant policy shift that involves converting foreign currencies in domiciliary accounts to naira to stabilize the national currency. This move comes in response to the recent sharp depreciation of the naira, reaching an all-time low against the dollar.
If implemented, the policy would mandate the conversion of idle foreign currencies in individuals’ and corporate organizations’ domiciliary accounts to naira at a rate determined by the Central Bank of Nigeria (CBN). The objective is to counteract the forex scarcity issue and curb the elite’s tendency to hoard foreign currencies, negatively impacting the naira.
Sources within the Presidency emphasize the need to address the peculiar trend of keeping dollars in domiciliary accounts, estimating that over $30 billion is currently held in such accounts in Nigeria. The move aims to encourage transparency and proper utilization of foreign exchange, aligning with the government’s broader economic goals.
This potential policy shift contrasts with the administration’s earlier stance, expressing intentions to attract funds from domiciliary accounts and Nigerians abroad for substantial investments in various sectors. The Minister of Finance had highlighted the vast foreign exchange reserves outside the system that, if mobilized, could contribute to economic rejuvenation.
The policy debate arises amidst broader financial discussions, including the Central Bank of Nigeria’s recent ban on banks and fintechs from International Money Transfer Operations (IMTO). This decision aims to regulate money remittances and ensure compliance with established regulatory frameworks.
Despite these developments, the naira has shown signs of recovery against the dollar, slowing its decline in the past three days after reaching an all-time high earlier in the week. The financial landscape remains dynamic, with ongoing efforts to enhance transparency, regulate financial operations, and stabilize the national currency.