The Central Bank of Nigeria (CBN) has rolled out guidelines for banks to implement the free foreign exchange (FX) deposit window, a scheme announced by the Federal Government. This program, which started on November 6, 2024, allows individuals to deposit foreign currency without scrutiny or penalties.
The CBN’s guidelines, which apply to commercial, merchant, and non-interest banks, enable these institutions to trade with deposited foreign currencies not immediately invested by participants. The banks must ensure that the funds are available to the participants upon request. Additionally, banks are required to adhere to anti-money laundering regulations and verify the identity of depositors.
Experts have largely supported the initiative, noting that it could improve liquidity in the FX market. Capital market analyst Rotimi Fakayejo emphasized the importance of discouraging dollar-denominated transactions within Nigeria to stabilize the exchange rate. However, some, like economist Marcel Okeke, expressed concerns about the scheme’s potential to encourage money laundering and its lack of incentives for depositors.
In response to declining naira performance, this scheme aims to integrate foreign currency held outside the formal banking system into the economy, boosting the supply of FX for imports and potentially improving inflationary pressures.
