The country’s foreign reserves fell by $373.23m from $36.57bn on June 1 to $36.2bn on June 29, latest figures from the Central Bank of Nigeria (CBN) revealed.
According to the CBN, the reserves maintained a steady rise at a level of $33.52bn as of April 30, before commencing its downward trend in June.
The reserves had hit a high of $45.17bn on June 11, 2019, but lost $11bn to close at $33.89bn as of April 28, 2020.
Moody’s Investors Service said on Wednesday Nigerian banks’ foreign currency funding gap would rise to $5bn over the current low oil prices, volatile foreign inflows, and lower remittances amid coronavirus pandemic.
In its July 2020 report, titled ‘Renewed foreign-currency shortages highlight vulnerability for banks’, it 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 percent, 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 percent foreign-currency deposit contraction, creating acute funding challenge.”
The CBN Governor, Mr. Godwin Emefiele, at the last Monetary Policy Committee meeting, reiterated the need for government to urgently reduce reliance on oil revenue by gradually diversifying the economy and improving tax collection.
He said headwinds to growth remained the legacy issues of the persistent infrastructural and security challenges.