The global credit rating agency Moody’s Ratings has warned that the Central Bank of Nigeria’s ability to maintain a stable naira without draining reserves may be impacted by declining oil prices and stubborn inflation.
This was disclosed in the rating action update shared on its website on Friday, where it upgraded Nigeria’s long-term foreign currency and local currency issuer ratings to B3 from Caa1 and changed the outlook to stable from positive.
At the centre of Nigeria’s credit upgrade was the CBN’s overhaul of the country’s foreign exchange regime, which scrapped multiple exchange rates in favour of a unified market-driven system.
According to Moody’s, this has enhanced transparency, improved forex liquidity, and significantly narrowed the gap between official and parallel market rates.
The move has also boosted investor confidence and improved external debt repayment capacity.
Despite the positive rating action, Moody’s has warned that Nigeria’s economic outlook remains vulnerable to external shocks, particularly a decline in global oil prices and the persistence of inflationary pressures.
These, the agency noted, could test the resilience of the current monetary framework and derail some of the recent macroeconomic gains.
