Business

CBN’s Currency Swap Hits $12bn Amid Weak Reserves

Published

2 years ago

September 9, 2023

Fitch Ratings has estimated the Central Bank of Nigeria’s currency swaps with domestic banks to be between $10bn and $12bn as of the end of 2022.

It stated that this was 30 per cent of the country’s gross reserves (at $37bn as of 2022’s end), and comprised swaps with domestic banks, and others.

According to the international rating agency, this suggested that the country’s net reserve position may be weaker than anticipated, and emphasised its external vulnerabilities.

It disclosed this in a report titled, ‘Nigeria’s weaker reserves highlight external risk and policy challenges’, following the recent publication of the CBN’s financial statements.

The report added that, “Fitch estimates, partly based on our survey data, that CBN swaps with domestic banks were $10bn – $12bn at end-2022, and are likely to remain close to that level, but there is less visibility on swaps it may have with international counterparties.

“We anticipate that most of these domestic swaps will continue to be rolled over, reflecting incentives for banks to invest the naira received in high-yielding sovereign securities and the sector’s limited reliance on swaps for foreign-currency liquidity given its sizeable foreign-currency placements with international banks.”

It said the recent publication of consolidated financial statements to end-2022 by the CBN, the first for many years, suggested the net reserve position may be weaker than we had anticipated. The statements, which confirmed sizeable liabilities, increased transparency around Nigeria’s reserves, but important gaps remained, preventing a reliable assessment of the net reserve position.

Fitch said, “When we affirmed Nigeria’s rating at ‘B-’ with a Stable Outlook in May, we stated that external finances were a key rating sensitivity. We estimated that around 30 per cent of Nigeria’s gross reserves (which were $37bn at end-2022) comprised swaps with domestic banks, although we considered that some other reserves could well be encumbered.”

The credit rating agency highlighted that the CBN financial statements indicated that liabilities as of the end of 2022 included $7.5bn securities lending ($5.5bn of which was short term), and $6.8bn short-term liability from foreign-currency forward payables.

It stated that uncertainty surrounded the near $32bn of “FX forwards, OTC futures, and currency swaps”, which were recorded as an off-balance-sheet commitment but are not broken down.

It noted that this could include some non-deliverable contracts settled in naira, which would not be a drain on reserves, as well as commitments of a longer tenor.

Fitch said the recent exchange-rate liberalisation and improvements in the overall monetary policy framework could strengthen the country’s credit profile by easing foreign-currency supply constraints, but a recent loss of reform momentum and the constrained reserve position highlighted the significant challenges these policy adjustments faced.

It noted that the reserve disclosures offset more positive recent developments for Nigeria’s credit profile.

Recently, JP Morgan disclosed that the country’s total currency swaps stood at $21.3bn as of the end of 2022. It stated that the slow net FX reserves meant continued FX market pressures.

The Central Bank of Nigeria also recently faulted a recent estimation of the country’s foreign reserves by JP Morgan saying it was presented out of context.

Making clarification on the estimation of Nigeria’s reserves, the Director of Monetary Policy Department, CBN, Hassan Mahmud, noted, “We have the numbers there. The central bank’s reserves are on our bank net. Yes, the figure you see today may not be exactly to the last decimal point, but you have that picture that you are seeing there.”

He added, “We have $33bn, there is an IMF facility there, the SDR is also there, we have the JP Morgan numbers that you mentioned, we have forwards, they are all there.”

PUNCH

Business

JUST IN: CBN Removes Cash Deposit Limits, Raises Weekly Withdrawal To N500,000

Published

4 days ago

December 3, 2025

Editor

The Central Bank of Nigeria (CBN) has removed cash deposit limits and also increased the weekly cash withdrawal limit from N100,000 to N500,000.

The CBN made this known in a circular to all banks and other financial institutions, signed by Dr Rita Sike, Director, Financial Policy and Regulation Department.

Sike said that the revisions formed part of ongoing efforts to moderate the rising cost of cash management and address security concerns.

According to her, it will also curb money laundering risks associated with heavy reliance on cash.

She said that the cash-related policies previously issued in response to evolving circumstances were aimed at reducing cash usage and promoting the adoption of electronic payment channels.

“However, with time, the need to streamline and update these provisions to reflect present-day realities became necessary,” she said.

She said that with effect from Jan. 1, 2026, the cumulative deposit limit would be removed and the fee previously charged on excess deposits would no longer apply.

The director said that the cumulative weekly withdrawal limit across all channels has been reviewed to N500,000 for individuals and five million Naira for corporates.

“Withdrawals above these thresholds will attract excess withdrawal charges as specified,” she said. “The special monthly authorisation that allowed individuals to withdraw five million Naira and corporates N10 million once a month has been abolished.”

She said that for Automated Teller Machines (ATMs), daily withdrawal remains capped at N100,000 per customer, with a maximum of N500,000 weekly.

She said that this formed part of the overall weekly withdrawal limit applicable to all channels, including point-of-sale (POS) transactions.

Sike said that excess withdrawals above the stipulated limits would attract three per cent for individuals and five per cent for corporate customers.

According to her, this will be shared in the ratio of 40 per cent to the CBN and 60 per cent to the operating bank or financial institution.

She directed banks to load all currency denominations in ATMs, while the existing limit on over-the-counter encashment of third-party cheques remains pegged at N100,000.

Sike said that such withdrawals would be counted as part of the cumulative weekly limit.

The director said that banks were also required to render monthly returns to the relevant supervisory departments.

She listed the departments to include the Banking Supervision Department, Other Financial Institutions Supervision Department, and the Payments System Supervision Department.

Sike said that revenue-generating accounts of federal, state, and local governments were exempted from the new withdrawal rules.

She said that accounts of microfinance banks and primary mortgage banks held with commercial and non-interest banks are also exempted from the new rules.

She, however, said that the long-standing exemption previously enjoyed by embassies, diplomatic missions, and aid-donor agencies had been removed.

Business

Naira Records Depreciation Against US Dollar Across Official, Black Markets

Published

5 days ago

December 2, 2025

Editor

The naira depreciated against the dollar at the official and parallel foreign exchange markets on Monday to begin the new month on a bearish note.

Central Bank of Nigeria’s data showed that the Naira weakened to N1,448.44 on Monday, down from N1,446.74 traded on Friday last week.

This means that the naira dropped by N1.7 against the dollar on Monday when compared to Friday.

Similarly, at the black market, the Naira declined by N5 to N1,475 on Monday from N1,470 at the close of work last week.

The development comes as Nigeria’s foreign reserves stood at $44.61 billion as of November 27th, 2025.

Business

NNPCL Revenue, Profit Soar To N5.08tn, N447bn In October

Published

1 week ago

November 29, 2025

Editor

The Nigerian National Petroleum Company Limited has announced a significant revenue increase to N5.078 trillion for October 2025.

The state-owned firm disclosed this in its monthly financial report released on Saturday.

According to the financial report, from N5.078 revenue in October, the company posted a N447 profit after tax.

The figure represents a significant 19.2 percent increase in revenue from N4.26 trillion and a 106 percent rise in PAT from N216 billion in September 2025.

The report stated that from January to September, NNPCL paid N11.150 trillion in statutory payments to the federation.

Four days ago, NNPCL posted a total of N45.1 trillion as total revenue for the 2024 financial year.