The Federal Government (FG) has issued an ultimatum of nine months for individuals, companies, and other entities holding significant amounts of U.S. dollars outside the formal banking system to deposit these funds into commercial banks. This directive comes as part of the government’s broader strategy to stabilize the naira and combat the growing influence of the parallel (black) market on foreign exchange rates.
Authorities have noted that the unregulated holding of dollars outside the banking sector contributes to reduced dollar liquidity, fueling volatility and putting added pressure on the naira. By mandating the deposit of these funds into banks, the FG aims to increase transparency and ensure that dollar transactions are conducted within a regulated system, which could help stabilize exchange rates and make foreign exchange more accessible to businesses.
READ ALSO: BREAKING: CBN Sells Dollars to BDCs Below Market Rate at N1,101/$1
Additionally, financial analysts suggest that this policy might be paired with other reforms in the coming months to encourage remittances through official channels, as well as incentives to boost local dollar deposits. The FG’s efforts align with ongoing Central Bank of Nigeria (CBN) initiatives focused on exchange rate reforms, designed to reduce the disparity between official and parallel market rates.
However, concerns remain regarding compliance and enforcement, especially in informal sectors where foreign currency transactions are common. The government has yet to announce specific penalties for non-compliance but is expected to monitor and review the impact of the policy ahead of the deadline.
