JOHANNESBURG, Feb 16 (Reuters) - 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 FX costs of import, meaning they are on the hook if
the companies fail to make the foreign currency payments,
Moody's said.
Nigeria's commercial banks had lent $10.4 billion of FX in
aggregate terms to the central bank as of June 2022, posing a
further risk to bank liquidity, Moody's added in the note.
"The central bank has a strong track record of repaying the
FX it owes to the banks, but at a time of acute FX shortages,
there is increased risk that it would extend the life of some
contracts, postponing repayment."
(Reporting by Rachel Savagem editing by Jorgelina do Rosario)
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