(Adds context on Nigeria FX shortages, details of Moody's note)
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 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.
Off-balance sheet, trade-related exposure of the Nigerian
banks it rates was about $9.8 billion in 2022, 54% of banks'
liquid FX assets, Moody's said.
Nigeria regularly suffers from acute foreign currency
shortages as the central bank tries to steady the naira. It
currently trades at 460 naira per $1 officially , compared
to around 750 on the black market, where it fell below 800 naira
last year.
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."
Cash shortages are stoking anger in Nigeria ahead of
presidential and parliamentary elections next week, prompting
the president to grant an extension to a deadline to turn in old
bank notes.
(Reporting by Rachel Savage Editing by Jorgelina do Rosario
and Mark Potter)
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