There are speculations that the Central Bank of Nigeria (CBN) might pounce on foreign currencies in domiciliary accounts and convert such to naira in order to stabilise the foreign market.
The rumour first surfaced on social media that the apex would be converting to naira domiciliary account holdings
How True Is This Report?
The same rumour emerged a week after the July 27 sanctions of the Bureau De Change operators by the CBN when dom account holders nursed the fear of being forced to collect the naira equivalent of dollars, pounds, or euro in their dom account.
But in a reaction, Osita Nwanisobi, Director of Corporate Communications of CBN, described the report as not only fake but aimed at triggering panic in the foreign exchange market.
Does The CBN Have The Powers To Convert Dom Account To Naira?
As the bankers’ bank, the CBN has the powers to take monetary actions and implement policies it deemed fit to bring sanity to the FX market as we pointed out in one of our analyses of August 4, 2021.
But the apex bank says in a circular titled, “CBN Categorically Denies, and Strongly Condemns Peddlers of Rumor on Domiciliary Account Holdings” assured holders of dom accounts that the apex bank wasn’t thinking in that direction.
“…there was no plan whatsoever to convert the foreign exchange in the domiciliary accounts of customers into Naira in order to check purported shortage of availability of the United States dollars.
He, therefore, admonished holders of domiciliary accounts and other members of the banking public “to completely disregard these fictitious documents and malicious rumors, and go about their legitimate foreign exchange transactions”
He urged members of the public to access the latest CBN news and update on its official website at: www.cbn.gov.ng
At the time of this report, the naira was on the move to N600 against $1 USD as it stood at N545 at the close of trading on Friday, September 10, 2021, the highest in the history of NGN/USD in the parallel market also known as the black market rate among Nigerians.
Verdict:
CBN has the powers to take monetary decisions in the best interest of Nigeria’s economy, but the claim that it was planning to forcefully convert dom account deposits to Naira is false