The Central Bank of Nigeria (CBN) reported that it recorded huge reduction in foreign exchange deposits by Deposit Money Banks (DMBs) largely due to the disruptions of global trade in 2020 due to the COVID-19 pandemic
The apex bank made this disclosure in the recently published Annual Report 2020 compiled by the CBN’s Currency Operations Department.
According to the report, there is also a huge reduction in the volume and cost of foreign exchange procurement.
The apex bank stated that the receipt and authentication of foreign currency deposits by Deposit Money Banks (DMBs) significantly reduced due to the downturn in global trade in 2020.
It also reported a drop in the cost of foreign exchange procurement linking the decline it to the disruptive impacts of the COVID-19 pandemic.
It clarified: “The Bank recorded a significant reduction in the volume and cost of foreign exchange procurement. A total of USD1,830.00 million was procured throughout 2020. This value represents a decrease of USD2,120.00 million or 53.67 per cent relative to the USD3,950.00 million procured in 2019”.
This is even as it also reported that the inflow was used to fund Bureaux De Change (BDC) operations, payment of estacode and Personal Travel Allowances (PTA) to Ministries, Departments and Agencies (MDAs).
Analysts believe that the sharp drop in foreign exchange deposits by DMBs is tied to the distortion caused by the pandemic.
However, they are projecting that following the improvement in vaccination with the attendant gradual recovery of the nation’s economy, there will be an uptick in foreign exchange deposits by DMBs, especially in the last quarters of the year.
