The Central Bank of Nigeria (CBN) has issued a directive to banks prohibiting the use of foreign exchange as collateral for loans denominated in the local currency.

This move, detailed in a letter dated April 8, underscores the CBN's efforts to stem the ongoing depreciation of the Naira amidst persistent U.S. dollar shortages.

Banks have been cautioned against non-compliance, with the CBN warning of severe repercussions for institutions that disregard the new mandate.

This policy aims to stabilise the Naira by controlling its liquidity and managing the demand for dollars within the financial system.