Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Nigerian banks to limit debit card spending abroad to ease FX risk

Published 07/19/2020, 06:47 AM
Updated 07/19/2020, 06:50 AM
© Reuters.

© Reuters.

By Chijioke Ohuocha

ABUJA (Reuters) - Nigerian banks plan to reduce the amount customers can spend abroad using debit cards on Monday, two lenders said, as banks try to limit foreign currency settlement risk.

The country is facing dollar shortages because of the sharp fall in the price of oil, Nigeria's main export, and domestic banks are trying to avoid transactions with hard currency.

Stanbic IBTC Bank (LG:IBTC), the local unit of South Africa's Standard Bank (J:SBKJ), said it will halve the spending limit for offshore card transactions to $500 per month from Monday and will limit cash withdrawals to $100.

Another top tier lender Zenith Bank (LG:ZENITHB) said it will temporarily suspend the use of debit cards abroad for cash withdrawals and cut the monthly spending limit abroad by more than half to $200.

"This review is in response to today's economic realities," Zenith said in a notice, advising clients to request prepaid dollar cards.

Other lenders — Ecobank (LG:ETI) and Fidelity Bank (LG:FIDELIT) — have also lowered withdrawal limits for individuals while abroad.

Such moves have previously been at the behest of the central bank, but it was not clear if the regulator was behind the latest action. The central bank did not respond to a request for comment.

The bank is battling to conserve dollar reserves that are down 19% from a year ago. Last week it depreciated the currency on the official market prompting the naira to weaken on the black and over-the-counter spot markets.

Bankers told Reuters that it now takes more than six months to settle foreign lines of credit.

Nigeria is yet to resume forex sales to retail currency traders after it banned international travel as part of a lockdown measure to slow the spread of the coronavirus that has killed 778 people and infected more than 36,000.

 

Latest comments

very impressive
Very thoughtful
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.