Banks jostle for dollar to scale up foreign loan provisions –

Nigerians will, from today, struggle harder for foreign exchange as banks are also looking for it, especially the United States dollar, to scale up their loan provisions.

The Central Bank of Nigeria (CBN) gave August 5, 2016, as the deadline for all Deposit Money Banks (DMBs) to increase their provisioning for foreign currency-denominated loans and related exposures.

An increased loan provisioning for banks became necessary following a new foreign exchange policy that brought imbalance in earlier provisioning made on the basis of N197/$ official exchange rate.

The apex bank yesterday said the development was one of the effects of the new foreign exchange guidelines, which liberalised the market. Naira currently exchanges for more than $305 at the interbank in response to forex trade liberalisation.

Analysts say it will now be more difficult for Nigerians to secure foreign exchange as banks struggle to keep as much dollars as they can in their coffers. The possible use of naira to back up dollar demand could further weaken the local currency and escalate prices of goods and services.