CBN speaks on alleged plan to crash exchange rate to N1.25 kobo

The Central Bank of Nigeria (CBN) has denied an alleged plan to introduce a new naira policy that will crash the dollar exchange rate to N1.25 kobo.

A report circulating online claimed that the CBN was mulling a new FX policy which is scheduled for November 2023 and will “better anchor inflation expectations and make for easier conversion to other major currencies”.

Even more, the unconfirmed report said the policy will “reverse the tendency for currency substitution” as well as “eliminate higher denomination notes with lower purchasing power”.

However, in a statement on Wednesday, September 13, the apex bank described the publication as false.

It tweeted:

“The Central Bank of Nigeria would like to bring to your attention that the attached message currently circulating on social media is false and should be disregarded.”

Recall that the CBN had asked deposit money banks (DMBs) to stop utilising gains from the revaluation of the naira to pay dividends or finance operations.

As noted by the financial institution, a review of the foreign exchange (FX) regime change showed the banks are in a position to profit from the policy because of its potential to significantly increase the naira value of banks’ foreign currency (FCY) assets and liabilities.

It gave the directive in a letter, titled: ‘Impact of Recent FX Policy Reforms: Prudential Guidance to the Banking Sector’, which was dated September 11, 2023, and signed by Haruna Mustafa, CBN’s director of the banking supervision department.