The Central Bank of Nigeria in a circular to banks released on Thursday has charged banks to desist from using gain from foreign exchange revaluation to meet their daily operating expenses.
They are not also to use such funds to pay dividend to their shareholders.
These warnings were contained in a circular signed by Adetona Adedeji, acting director, banking supervision department on March 14, 2024.
The circular titled: ‘Re: Impact of recent FX policy reforms: Prudential guidance to the banking sector’ is a follow- up to the letter to the banks referenced BSD/DIR/CON/LAB/16/020 issued to the banks on September 11, 2023.
The CBN reiterated that banks are required to exercise utmost prudence and set aside FCY revaluation gain as a counter-cyclical buffer to cushion any adverse movements in the FX Rate.
Foreign currency revaluation is the period-end process of re-valuing a financial account or transaction from a foreign currency into a company’s reporting currency using a foreign exchange rate.
Nigerian leading commercial banks recorded significant FX revaluation gains estimated at a combined gain of about N1. 7 trillion in the first half of 2023, a significant increase compared to a combined gain of N66. 559 billion in H1 2022.
