The House of Representatives has raised concerns over Nigeria’s foreign exchange market volatility, revealing that four banks are currently holding approximately $5 billion in excess foreign exchange reserves.
In response, the House has directed its Committees on Banking Regulations and Banking Institutions to conduct a comprehensive investigative hearing into the matter.
This decision was made following the adoption of a motion addressing the pressing national concern regarding banks’ non-compliance with directives issued by the Central Bank of Nigeria (CBN) regarding Net Open Position (NOP) Limits.
The motion, presented by Hon. Babajimi Benson, Chairman of the House Committee on Defence, stressed the significance of upholding CBN guidelines on excess long foreign exchange holdings and net open position limits.
Hon. Benson underscored the importance of enforcing CBN policies to maintain financial stability, especially given the adverse effects of non-compliance on the economy.
During deliberations, Hon. Benson emphasized the pivotal role of the CBN in regulating the country’s monetary policies, as mandated by the CBN Act.
He expressed disappointment over the disregard for existing financial regulations, calling for swift action to address the issue and ensure compliance with regulatory frameworks.
The motion revealed that GTB, Zenith Bank, UBA, and First Bank collectively hold over $5 billion in excess foreign exchange as of January 2024. It highlighted concerns about speculative practices where banks hoard acquired foreign exchange instead of making them available to customers, leading to artificial scarcity and increased exchange rates.
Furthermore, the House expressed worry over the reluctance of commercial banks and certain financial institutions to implement monetary measures put in place by the CBN to address these practices.
They emphasized the need for legislative measures to enforce compliance and curb speculative activities contributing to economic hardship in the country.
To address the situation, the House tasked its Committee on Legislative Compliance with overseeing the comprehensive enforcement of directives, including adherence to NOP limits and addressing issues contributing to market volatility.
This move aligns with recent efforts by the CBN to regulate the foreign exchange market and curb speculative activities by banks and financial institutions.
