The Central Bank of Nigeria (CBN) has revealed that the country’s foreign reserves dropped from $36.57bn to $36.2bn in June 2020.
According to the figures released on Thursday by the apex bank, the country’s foreign reserves fell by $373.23m from $36.57bn on June 1 to $36.2bn on June 29, noting that the reserves sustained a steady rise at a level of $33.52bn as of April 30, before dropping in June.
As of June 11, 2019, the reserves stood at $45.17bn but dropped to $33.89bn in April 2020.
U.S credit rating agency, Moody’s Investors Service, on Wednesday, said the Nigerian banks’ foreign currency funding gap would jump to $5bn over the current low oil prices, volatile foreign inflows and lower remittances amid coronavirus pandemic.
In its report for July 2020 tagged ‘Renewed foreign-currency shortages highlight vulnerability for banks’, the agency noted that the challenges might result to a repetition of the foreign currency liquidity pressures that wrecked Nigerian banks’ foreign exchange operations during a previous oil crisis in 2016-2017.
Peter Mushangwe, a banking analyst at Moody’s Investors Service, 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.”
