• Monday, December 04, 2023
businessday logo


CBN will not raid domiciliary accounts held in Nigeria

How we made payment system in Nigeria globally competitive – CBN

The Central Bank of Nigeria (CBN) will not restrict access and application of funds held in domiciliary accounts in Nigeria.

The regulator also dismissed rumours that the apex bank will engage in capital controls or raid the $19.5 billion held by Nigerians in private bank accounts.

According to an official of the CBN, speaking anonymously to BusinessDay, “The CBN will not go into any form of capital controls, and in particular that rumour about going into funds held in domiciliary accounts is totally untrue.”

The official who elected not to be named said, “We have foreign exchange reserves in excess of $34 billion today, and we have the ability to do what we say we will do to maintain macro – stability.”

Domiciliary accounts are accounts maintained and operated in foreign currencies other than the Nigerian Naira.

Domiciliary deposits were equivalent to 21 percent of total deposits of N17 trillion in the Nigerian Banking system as at half year 2014 or $19.5 billion, according to data from investment firm, Renaissance Capital.

The CBN has been battling to defend the naira currency as the 50 percent sell-off in crude oil prices last year leaves the Nigerian economy which gets 70 of its income and 95 percent of foreign exchange from oil sales, struggling to adjust.

Read also: OPECs February oil supply hits lowest since June on Iraq-survey

The Naira started the week on Monday with weak demand, shedding 1.07 percent against the greenback to pair trading at N187.05/USD. Forward quotes closed at an average bid and ask price of N190.12 and N191.70 respectively

Brent for March settlement slid as much as $1.12 to $49.05 a barrel on the London-based ICE Futures Europe exchange at 4:15 p.m. local time.

The Monetary Policy Committee of the CBN chaired by Governor Godwin Emefiele hiked the benchmark interest rate to 13 percent on Nov. 25 and also moved the naira’s official peg for twice-weekly auctions to a midpoint of N168 per dollar from N155 and widened its trading band to 5 percent either side from 3 percent.

The CBN also reduced the FX trading position of banks to 0.1 percent of shareholders’ funds unimpaired by losses and changed the timeline for utilisation of funds to 72 hours.

Dollar demand may be “temporarily high” before the 2015 elections and should ebb afterwards, Richard Segal, head of emerging-markets credit strategy at Jefferies International Ltd. in London, said.

Nigeria’s economy remains resilient in the face of falling oil prices and may expand 5 percent this year, Aurelien Mali, a senior analytical adviser for Moody’s Investors Service, said in a statement last month.

Moody’s rates Nigeria’s debt at Ba3, three levels below investment grade, with a stable outlook.