Worried by the COVID-19 and drops of oil prices, banks across Nigeria have chosen to reduce the amount of foreign currency their customers spend abroad.
Guaranty Trust Bank Plc is among the banks reducing the money spent by customers internationally. The bank lowered the maximum amounts that customers could spend on naira-denominated cards to $1,500 from $3,000. Zenith Bank Plc lowered its limit from $1,000 from $3,000.
The Central Bank of Nigeria recently changed its exchange rate between naira and US dollar to N360/$1 from 307/$1. The event marked the first official devaluation of the naira since 2017.
In response to the effects of the virus on the populace, banks have also contributed money to efforts that are being made to stop the spread of the virus. Three commercial banks committed over N500 billion to push against the pandemic. Standard Chartered recently announced that it would commit $1 billion to finance companies providing goods and services to help in quenching the fires of the pandemic.
With oil being Nigeria’s biggest export, the government could be in for a rough road as oil price wars intensify. The nation could face major challenges in funding its $37 billion budget which it passed at a benchmark oil price of $57 per barrel, double its current prices.
The US, despite being a major cause of the price wars, is facing an even tougher time. The US, recently presented a $6 trillion stimulus package, could find its dollar losing significant amounts of its value as the economic effects of the coronavirus and the price wars get worse.
Global events threaten the fiat of both big and small economies. Nations which have already faced major devaluations of their currencies have turned to digital currencies as a lifeline. Bitcoin has helped Venezuelans through times of economic chaos. More citizens of nations around the world may soon make similar claims.