Why Nigeria’s Dollar Scarcity Will Not Go Away - Moody’s
Despite the Central Bank of Nigeria pumping at least 4 billion dollars since it started intervening in the foreign exchange market, there is no end in sight to the country’s dollar shortage.
According to global credit ratings and research agency, Moody’s Investors Service, "Nigeria’s dollar liquidity constraints are likely to persist for the foreseeable future, despite the recent improvements in foreign exchange earnings and availability."
In a report released on Wednesday, Moody’s said dollar usage in the country is unlikely to return to previous levels.
“Oil prices are highly unlikely to return to the $100 per barrel level that would lead to greater foreign exchange inflows,” Moody’s Vice President - Senior Credit Officer and co-author of the report - Aurélien Mali, said.
He noted that the oil price shock between 2014 and 2015 more than halved Nigeria’s foreign exchange earnings.
This caused exports to fall from an average of around $90 billion between 2013 and 2014 to $46 billion in 2015.
The rating agency also notes that Nigeria’s non-oil sectors has struggled to adjust to limited dollar liquidity, given the high import content of inputs and the delays associated with sourcing domestic substitutes.