Moody’s says Nigeria FX shortage may threaten bank liquidity

Foreign exchange shortages faced by local Nigerian companies may threaten bank liquidity, while a devaluation of the naira precipitated by these shortages would weaken banks’ capital, ratings agency Moody’s said in a note on Thursday.

Banks have been providing trade finance to companies to cover the foreign exchange (FX) costs of imports, meaning they are on the hook if the companies fail to make the foreign currency payments, Moody’s said.

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