Banks in Nigeria have suspended individual withdrawals with local debit cards abroad and toughened limits on online payments, seeking to ease foreign currency settlement risk with the country facing dollar shortages.
This comes after the country’s Central Bank last month said it would stop dollar sales to lenders this year.
The banks informed their customers they were reducing the limit from $100 to either $20 or $50 a month. It means customers would not be able to use their naira debit cards to pay for any transactions more than $20 or $50 in a month.
The United Bank of Africa (UBA) was first to take the decision on February 24 when it announced $20 as its new limit.
Stanbic Bank said it would cut limits for online purchases and payments by half to $50 “in response to economic realities”, in addition to suspending cash withdrawals.
Zenith Bank said it would impose a new monthly limit of $20 for online transactions, down from $100 previously.
This means customers seeking to do foreign transactions will have to open and fund domiciliary accounts with dollars, pounds or euros purchased from the parallel market at the prevailing exchange rates.
The central bank is battling to protect reserves that have dwindled since the coronavirus pandemic triggered a sharp fall in the price of oil, Nigeria’s main export. The oil price plunge also prompted foreign investors to shed Nigerian assets.
Oil prices have since recovered and soared, but a backlog demand for foreign exchange has dodged currency markets and the naira.
The central bank said last month it would stop commercial banks from sourcing dollars from its reserves in 2022.
Nigeria has suffered an importation-fuelled foreign exchange crisis for years, but the scarcity worsened in 2021 with Naira crashing over 30% in one year.
As of the end of February, Nigeria’s foreign reserve fell to $39.86 billion, compared to $40.04 billion recorded as of January ending.
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