Nigerian Banks Place Restriction on Dollar Deposits Amid Naira Slump

Nigerian banks have placed a new restriction on the amount of United States dollars customers can deposit into their domiciliary accounts. The initial amount allowed to be deposited was $10,000 monthly. It has now been reduced to $5,000 monthly, ThisDay reports.

The restriction is said to be in compliance with a directive from the Central Bank of Nigeria (CBN), as a measure to discourage the increasing patronage for the dollar which rises against the naira daily.

According to recent research carried out by Coronation Asset Management, 40 percent of deposits made in the top 10 banks in Nigeria are in dollars. A revelation the report described as disturbing.

“We looked at the top 10 banks and the breakdown of their deposits showed that 40 per cent of their deposits are in dollars and it is quite astonishing,” Guy Czartoryski, the Head of Research at Coronation Asset Management was quoted as saying.

However, the new policy would not apply to customers making electronic transfers as well as oil and gas companies and dollar payments into government accounts, the report said.

Reacting to the rush by Nigerians to convert their naira to the dollar, the CBN Governor, Godwin Emefiele, admitted that it is only rational given the incessant depreciation of the naira.

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“…over time, we have seen significant depreciation in the naira. If you look at what happened in 2020, no one expected that the naira would be devalued twice in that year and even the outlook, this year is suggesting further depreciation in the naira. So, it makes sense to a lot of people to store their money in dollars”, the CBN governor said during an interview on Arise News Channel on Tuesday, May 11.

“But, from the CBN standpoint, you agree with me that there is dollar scarcity. Again, it is important for the flow of money to be captured in the system,” he added.

In recent times, the CBN has developed policies that that would encourage more inflows of foreign currencies into the Nigerian economy. Some of which were the “CBN Naira 4 Dollar Scheme” and the granting of access to forex from Diaspora and other money transfer remittances.