CBN Implements Stricter Measures to Curb Forex Speculation

In a bid to address concerns over rising foreign currency exposures among banks, the Central Bank of Nigeria (CBN) has issued a new circular outlining prudential requirements.  The directive aims to mitigate risks associated with excessive foreign currency speculation. The circular, titled “Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,” stipulates that the Net Open Position (NOP) limit for overall foreign currency assets and liabilities should not exceed 20 percent short or 0 percent long of shareholders’ funds unimpaired by losses.  Banks with current NOP exceeding these limits must adjust to the prudential limit by February 1, 2024. Banks are now mandated to calculate their daily and monthly NOP and Foreign currency trading position using provided templates.  Non-compliance with the NOP limit may result in immediate sanctions and/or suspension from the foreign exchange market, warns the apex bank. Additionally, the CBN requires banks to maintain a sufficient stock of high-quality liquid foreign assets to cover maturing foreign currency obligations.   Foreign exchange contingency funding arrangements with other financial institutions are also mandatory. To mitigate currency risks, banks are urged to borrow and lend in the same currency, adopt natural hedging, and align interest rates for borrowing and lending.  The circular also emphasized the need for approval from the CBN for any early redemption clause in eurobonds.

No immediate floods threat in Nigeria – FG

Prof. Joseph Utsev, the Minister of Water Resources and Sanitation, has said there is no immediate threat of flooding, whilst calling on the government at all levels to put measures in place to prevent flood emergencies. Utsev told newsmen in Abuja that the Nigeria Hydrological Services Agency (NIHSA) had observed an increase in the volume of flow along the River Benue system, registering a flow level of 8.97 meters today. This, he said, was insignificant, as compared to a flow level of 8.80 meters on the same date in 2022. According to him, reports from inland dams including Kainji, Jebba, and Shiroro also showed a consistent flow regime. “In Lokoja, the heightened flow volume along the River Benue system, the flow situation at the confluence of the Niger and Benue rivers in Lokoja, Kogi State, remains within normal parameters. “The flow level at the monitoring station downstream of the confluence records 7.80 meters today, compared to 8.24 meters on the same date in 2022. “As at today, there is no threat to lives and properties, especially those states that are contiguous to Rivers Niger and Benue.” The minister called on all tiers of government to ensure preparedness and deploy appropriate measures to minimise the potential impact of flooding during the peak of the rainy season. He called on states to increase sensitisation on the need for people living along the river banks to relocate to higher grounds during the peak period of rainfall. “States and Local Governments should intensify efforts in clearing blocked drainages and also construct new ones where they do not exist. “Removal of illegal structures constructed within the floodplains, the general public, especially road users, should desist from walking or driving through any pool of water or flood”. The minister said it was important to acknowledge the period of heavy rainfall, flooding, and flood-related disasters that typically occured during July, August, September, and October. According to him, Dam water releases are integral to safeguarding dam integrity and mitigating flooding in adjacent communities. The 2023 Annual Flood Outlook showed that 178 LGAs in 32 states of the Federation, and the FCT, fall within the Highly Probable Flood Risk Areas. 224 LGAs in 35 States of the Federation, including the FCT fall within the Moderately Probable Flood Risk Areas.