The Bank Directors Association of Nigeria (BDAN) has voiced its backing for a recent directive from the Central Bank of Nigeria (CBN) urging commercial banks to cease “hoarding” foreign currencies.

The CBN had expressed concerns regarding the increasing foreign currency exposure of banks through their Net Open Positions (NOP).

In response, the CBN issued a circular titled ‘Harmonisation of Reporting Requirements on Foreign Currency Exposures of Banks,’ instructing banks to sell excess dollar stocks to their customers.

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The circular specified that the NOP limit for overall foreign currency assets and liabilities should not exceed 20 percent short or zero percent long of shareholders’ funds.

BDAN, in a statement by its Chairman, Board of Directors, Mustafa Chike-Obi, expressed full support for the CBN’s measures aimed at strengthening the nation’s financial system.

The association highlighted that these measures underscored the commitment of the CBN to ensuring banking sector stability and resilience.

Following the CBN directive, dollar supply surged by 180 percent to $440 million at the official foreign exchange market (NAFEM).

BDAN lauded the directive as essential for effective foreign currency exposure management, emphasizing its role in mitigating potential losses that could pose significant systemic challenges.

BDAN commended the CBN’s proactive stance in safeguarding the interests of depositors, investors, and the overall economic well-being of Nigeria.

It viewed the regulatory requirements as a positive step towards creating a resilient financial landscape and preventing adverse effects on the banking sector.

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The association encouraged all banks to fully comply with the new directives and participate actively in the implementation process.

BDAN pledged continuous collaboration with the CBN and other stakeholders to foster a dynamic and resilient financial ecosystem, expressing belief that these steps would improve the effectiveness of the banking system.