The Central Bank of Nigeria (CBN) stated that it recorded a significant reduction in foreign exchange deposits by Deposit Money Banks (DMBs) due to the downturn in global trade in 2020.
This was disclosed in the recently released Annual Report 2020 as compiled by the CBN’s Currency Operations Department.
According to the report the CBN also recorded a significant reduction in the volume and cost of foreign exchange procurement.
What the CBN is saying
The report partly reads, “The receipt and authentication of foreign currency deposits by Deposit Money Banks (DMBs) reduced significantly due to the downturn in global trade in 2020.”
The report also pointed out a drop in the cost of foreign exchange procurement attributing it to the effects of the pandemic.
“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,” it stated.
The apex bank stated that inflow was used to fund Bureaux De Change (BDC) operations, payment of estacode and Personal Travel Allowances (PTA) to Ministries, Departments and Agencies (MDAs).
Bottom line
The reduction in foreign exchange deposits by Deposits Money Banks (DMBs) are strongly tied to the distortion caused by the pandemic.
However, since the vaccination has been introduced and businesses have resumed we should be expecting an uptick in foreign exchange deposits by Deposit Money Banks (DMBs).
God will help us in Nigeria