Forex

Dollar Shortage: Moody’s Says Nigeria’s Recovery May Take Time

Published

7 years ago

May 23, 2017

Naira to Dollar Exchange- Investors King Rate - Investors King

Dollar Shortage: Moody’s Says Nigeria’s Recovery May Take Time

Although foreign currency shortages in Nigeria and other sub-Saharan African countries are easing, it will take time for the sovereigns, banks and non-financial companies to restore their financial health, Moody’s Investors Service has said.

In a report released on Monday, Moody’s noted that dollar shortages stemming from lower oil and commodity prices had hit the finances of countries in the sub-region.

The report was titled, “Foreign-currency shortages are subsiding but will take time to overcome.”

In a statement on Monday, Moody’s Vice-President and co-author of the report, Lucie Villa, was quoted as saying, “Falling oil and commodity prices over the past two years have led to foreign currency shortages in numerous sub-Saharan African countries, with oil exporters hit particularly hard.”

“The stabilisation in oil and commodity prices over recent months will help to ease the pressure, but any recovery will depend on continued higher prices and could take some time.”

According to the VP, managing foreign currency shortages will remain a key policy challenge for sub-Saharan oil exporters.

In recent quarters, dollar rationing, currency devaluation and foreign currency borrowing by governments have stemmed the fall in external reserves in Angola and Nigeria.

According to the report, in the region’s banking sector, banks in Angola, Nigeria and the Democratic Republic of the Congo remain the most affected by foreign currency shortages due to their economies’ high reliance on dollars.

It said the region’s banks’ foreign currency deposits had been depleted and they had limited capacity to source new foreign funding.

“The resultant currency devaluations have also eroded banks’ loan quality, profitability and capital”, Moody’s Senior Vice-President and co-author of the report, Constantinos Kypreos, added.

According to a statement by Moody’s, pressures appear to be receding as their central banks continue to inject more dollars into the economy on the back of higher oil prices and related revenues.

Banks in South Africa are the least affected, reflecting the system’s limited dollarisation levels and low reliance on foreign funding.

The statement read in part “Although a gradual increase in commodity prices over recent months is supporting foreign currency liquidity and helping to ease currency shortages, it is too early to conclude that pressures on banks have reversed.

“This can only happen gradually as dollars flow back into the economies and exchange rates in ‘unofficial’ markets converge with official rates. Despite these challenges, banks in sub-Saharan Africa generally maintain high capital buffers and their profitability is robust.”

Non-financial companies operating in oil exporting countries such as Nigeria and Angola have been most affected by dollar scarcity and local currency weakness, according to the report.

Moody’s expects these challenges to continue in 2017 but alleviate in 2018.

“Dollar shortages make it difficult to pay suppliers of imported goods and equipment, meet dollar debt payments or to repatriate funds outside of the respective countries”

Moody’s Vice-President and co-author of the report, Dion Bate, was quoted as saying, “The associated local currency weakness increases the cost of servicing unhedged foreign currency debt obligations, reduces repatriated profits in foreign currency and lowers operating margins, as companies are not able to pass on high import costs to the consumer.”

Up Next

Naira Declines against Dollar Despite $205m Offer

Don't Miss

Bitcoin Rises Above $1,900 for the First Time

Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

Comments

Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

46 mins ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

24 hours ago

April 25, 2024

Samed Olukoya

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,260 and sell it at N1,250 on Wednesday, April 24th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,300
Selling Rate: N1,290

Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

2 days ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.