The CBN has issued a new circular on reporting foreign currency exposure to all banks to curb forex speculation and risk mitigation.

In several guidelines, the central bank seeks to address suspected cases of excessive foreign currency speculation while highlighting its concerns over the growing trend of banks holding large foreign currency positions.

“The CBN has noted with concern the growth in foreign currency exposures of banks through their Net Open Position (NOP). This has created an incentive for banks to hold excess long foreign currency positions, which exposes banks to foreign exchange and other risks.

The circular told the banks that the NOP limit of the overall foreign currency assets and liabilities, taking into cognizance both those on and off-balance sheet, should not exceed 20% short or 0% long of shareholders’ funds unimpaired by losses using the gross aggregate method.