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The Central Bank of Nigeria has banned the payment of foreign currencies into domiciliary accounts in commercial banks. In a statement released on Wednesday, the apex bank said the restriction was in furtherance of the decision by some Deposit Money Banks to stop the acceptance of foreign currency cash deposits because of the large volumes of foreign currencies already in their vaults. The decision was also made to curtail illicit financial flows. 

“Therefore, in its continued efforts to stop illicit financial flows in the Nigerian banking system which aligns with the anti-money Laundering stance of the Federal Government, the CBN hereby prohibits from the date of this circular the acceptance of foreign currency cash deposits by DMBs (Deposit Money Banks)," Olakanmi Gbadamosi, Director of Trade and Exchange at the CBN said in a statement on Wednesday.

After weakening to N242 to the dollar on the parallel market last month due to weak macroeconomic fundamentals and low price of crude oil in the international market, the naira strengthened on Monday to N215 to the dollar. The local currency depreciated on Tuesday to N230 but following the sale of about $80 million to Bureau de Change operators and traders by the CBN, the currency firmed against the dollar on the parallel market to N215 per the U.S. dollar on Wednesday.  

The apex bank has taken a number of policy measures to control the decline of the naira on the foreign exchange market including the restriction of access to foreign exchange for the importation of some 41 items, including intermediary goods. With this latest move, the central bank hopes to remove arbitrage opportunities in the foreign exchange market and stop the increasing dollarization of the economy.

Following this ban, “only wire transfers to and from Domiciliary Accounts are henceforth permissible,” the central bank said.