Nigerian banks need to take extra provisions on foreign exchange loans

by Reuters 0

Nigeria’s central bank has told commercial lenders to take extra provisions on all dollar loans, in the aftermath of its decision to let the naira trade freely on the interbank market, causing the currency to tumble.

The naira has lost 40 percent of its value since Nigeria ditched its 16-month-old peg of 197 naira to the dollar in June in a bid to lure back foreign investors who fled both the equities and bond markets after the plunge in crude prices.

The regulator asked lenders to send evidence of the extra provision by Wednesday in a circular issued last week.