WARNING!!! CBN Flags Risks For Dollar Account Holders Amid Naira Strength
The Central Bank of Nigeria (CBN) has warned that keeping funds in dollar accounts now exposes holders to significant exchange rate risks as the naira continues to strengthen.
The apex bank’s ongoing foreign exchange reforms and consistent interventions have positioned the naira on a strong trajectory, with analysts noting that further depreciation against the US dollar appears unlikely in the near term.
“With Yemi Cardoso at the helm of the Central Bank, holding US dollars that cannot be readily spent has become a dangerous bet in Nigeria,” a Broadstreet banker told MarketForces Africa.
The CBN has implicitly established a trading band for the naira, stepping in with targeted interventions to stabilise rates. Investor sentiment has also improved since the FX liberalisation, boosting dollar inflows and easing restrictions previously faced by foreign investors under the last administration.
As a result, the gap between the official and parallel markets has narrowed considerably, raising optimism about potential exchange rate unification.
Last week, the local currency appreciated by 0.91% against the dollar at the official window, closing at N1,487.90 per US$1. This marked a weekly gain of N13.60 and translated into losses for dollar account holders and speculative FX traders.
The rally was supported by steady CBN interventions, including a $150 million injection into the forex market, alongside increased foreign portfolio inflows.
At the parallel market, the naira gained 0.66% week-on-week to close at N1,520/US$1. Total FX inflows hit $605 million, up from $550.90 million in the prior week.
Foreign Portfolio Investments accounted for the largest inflows at $251.7 million (41.6% of the total), followed by exporters (19.72%), non-bank corporates (13.33%), Foreign Direct Investments (8.94%), and the CBN (6.10%), while other sources contributed 10.32%.
Gross external reserves climbed by $229.67 million (0.72%) to $42 billion, according to the CBN. Analysts at Coronation Research expect the naira to remain relatively stable, with possible appreciation if foreign inflows persist.
