Nigerian banks raise dollar spending limits as FX supply improves

Nigerian banks have raised dollar spending limits on foreign transactions, a move financial analysts say reflects stronger dollar availability in the formal foreign exchange market. The increase comes as improved FX liquidity gradually allows lenders to restore services that were cut during the country's worst period of dollar scarcity.

The latest adjustments give individuals and businesses more room to conduct legitimate transactions abroad, easing some of the constraints that hampered trade, travel and education payments in recent years.

Analyst warns on abuse

Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, however, warned that the higher limits must be closely monitored to prevent abuse. His caution highlights the need for banks and regulators to ensure that the restored flexibility is not exploited for speculative or illicit dollar demand.

Signs of improving FX liquidity

The move is another indication that dollar supply in the official window is improving after months of acute shortage. Banks had previously restricted spending on international cards and other foreign transactions as they struggled to meet demand for dollars.

With liquidity now firmer, the steady restoration of these services points to a gradual return to normal operations in the FX market. For naira users, it means less disruption to international payments and greater confidence in accessing foreign currency for genuine needs.

For Nigerian businesses, the higher spending limits could ease delays in paying foreign suppliers and settling obligations, an important step as the economy continues to adjust to recent exchange rate reforms.