The Central Bank of Nigeria (CBN) has warned banks against using the gains from foreign currency revaluation for payment of dividends and other expenses.
On September 11, 2023, the CBN had issued guidelines on how banks can manage the impact of FX reforms and warned against the use of foreign currency revaluation gains for their operations.
A revaluation of a currency happens when the value of a legal tender is increased relative to another currency in a fixed exchange rate regime.
Acting director, CBN banking supervision department, Adetona Adedeji, in a statement, said banks are to exercise utmost prudence in handling foreign currency gains.
“Further to our letter dated September 11, 2023, referenced BSD/DIR/CON/LAB/16/020 on the above subject, the Central Bank of Nigeria wishes to reiterate that banks are required to exercise utmost prudence and set aside FCY revaluation gains as a counter-cyclical buffer to cushion any adverse movements in the FX rate.
“In this regard, banks shall not utilize such FX revaluation gains to pay dividends or meet operating expenses,” the CBN said.
