Nigeria Business Information
No Result
View All Result
Wednesday, May 25, 2022
  • Login
  • Register
  • Home
  • Tenders
  • Auction
  • News
  • Grant
  • Subscription
Subscribe
Nigeria Business Information
  • Home
  • Tenders
  • Auction
  • News
  • Grant
  • Subscription
No Result
View All Result
Nigeria Business Information
No Result
View All Result
Home Nigeria News

Forex Shortage To Hit $5bn In Nigerian Banks- Moody’s

by Oluwole Odewole
July 2, 2020
in Nigeria News
Forex Market

Forex Market

FOREX SHORTAGE TO HIT $5BN IN NIGERIAN BANKS

Nigerian banks’ foreign currency funding gap will rise to $5bn over the current low oil prices, volatile foreign inflows and lower remittances amid coronavirus pandemic, Moody’s Investors Service said on Wednesday.

Moody’s, in its July 2020 report, titled ‘Renewed foreign-currency shortages highlight vulnerability for banks’, said the challenges were threatening to renew the foreign currency liquidity pressures that blighted Nigerian banks during a previous oil crisis in 2016-2017.

A banking analyst at Moody’s, Peter Mushangwe, said, “Lower dollar inflows at a time when foreign currency borrowing will likely be more expensive for Nigerian banks will strain their foreign currency funding, despite substantial improvements compared to 2016.

“Our moderate scenario where foreign-currency deposits decline by 20 per cent, while loans remain constant, would increase rated banks’ funding gap to N1.5tn [$3.8bn], and to N1.9tn [$5.0bn] under our severe-case scenario of 35 per cent foreign-currency deposit contraction, creating acute funding challenge.”

RelatedPosts

United Nations High Commissioner For Refugees (UNHCR)- Request To Quote For Installation Of Covid-19 Wash Hand Facilities

National Agency For The Control Of Aids (NACA)- Pre-Qualification Of Tender For The Procurement Covid-19 Related Commodities (3 Lots)

National Agency For The Control Of Aids (NACA)- Request For Proposal For The Engagement Consultancy Firm To Conduct The Needs Assessment Of The Secondary Health Facilities Selected In 35 States To Be Equipped For Provision Of Critical Care For Covid-19 Patients And Other Diseases Of Public Health Importance

According to the report, dollar shortages will intensify over the next 12-18 months if low oil prices persist, rekindling the foreign-currency liquidity crisis that led to severe dollar rationing during the last oil price crash in 2015-2017.

It, however, added that different from three years ago, Moody’s rated banks were in better shape as they had bolstered their dollar deposit bases and liquid

assets.

“Nevertheless, they remain vulnerable to an acute liquidity crunch if dollar deposits reduce by 20 per cent or more,” the report added.

According to Moody’s, foreign-currency availability will continue to tighten.

It said the lower dollar revenue from exports of oil, volatile foreign investment flows and reduced remittances from Nigerians working abroad would constrain dollar flows into the banking system for the remainder of 2020 and in 2021.

“Already, in the last quarter of 2019, annual foreign-currency deposit growth slowed sharply to eight per cent, from 24 per cent and 35 per cent in the two previous quarters respectively,” it said.

The report said foreign-currency borrowing would be more expensive at a time when banks had to refinance almost half of their borrowings.

It said Nigeria’s credit default swap spread, a proxy for sentiment on Nigerian credit, had increased substantially following the latest oil price slump.

Moody’s added that about 49 per cent of banks’ $7bn foreign-currency borrowings was maturing

in the next 12 to 18 months, creating funding pressure amid slowing dollar deposit flows and likely higher market funding costs.

TOOLKIT: Are You New to Tenders/Contract Bidding and Require Assistance? CLICK HERE

Tags: COVID-19Nigerian Banks
ShareTweetShare

POPULAR

  • International Organisation For Migration

    International Organization For Migration (IOM)- Invitation To Bid For The Supply And Delivery Of Various IT Equipment For ENBMC (11 Lots)

    0 shares
    Share 0 Tweet 0
  • Check List of NGO/Governments Tenders with May 2022 Deadlines

    0 shares
    Share 0 Tweet 0
  • How to Check for your Individual TIN (Tax Identification Number) Online

    0 shares
    Share 0 Tweet 0
  • International Organization For Migration (IOM)- Request For Quotation For The Proposed Renovation Of MHAC Lagos Building At Joel Ogunnaike Street, Ikeja GRA, Lagos

    0 shares
    Share 0 Tweet 0
  • United States Embassy, Abuja- Request For Quotation For The Supply Of 2HP Panasonic Split Unit A/C (20 Items)

    0 shares
    Share 0 Tweet 0

Copyright © 2021. All Right Reserved Nigeria Business Information

No Result
View All Result
  • Home
  • Tenders
  • Auction
  • News
  • Grant
  • Subscription

Copyright © 2021. All Right Reserved Nigeria Business Information

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In

instagram volgers kopen volgers kopen buy windows 10 pro buy windows 11 pro

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.