Jonathan Nwokpor
Since Olayemi Cardoso, the governor of the Central Bank of Nigeria, called BDC operators back into the foreign exchange market, the Naira has appreciated by N660 against the US dollar, according to Aminu Gwadabe, president of the Association of Bureaux de Change Operators of Nigeria, or ABCON.
Gwadabe revealed this to ZINGTIE in a statement over the weekend.
In his view, the recall of the BDCs was a crucial step taken by the apex bank to increase dollar liquidity at the retail end of the forex market, in addition to the tightening of monetary policy that resulted in an increase in the exchange rate, increased investment in government instruments, and the clearing of a $7 billion forex backlog.
Gwadabe emphasized that, from February’s low of N1,915 per USD to N1,255 per USD, the Naira has strengthened, signifying gains of N660, an amount that is noteworthy by any standard.
Recognizing BDCs as the third leg of the foreign exchange market and an efficient exchange rate transmission mechanism in FX management, the ABCON president expressed gratitude to the Cardoso-led CBN and other connected institutions.
He said: “The reconsideration of the BDCs into the mainstream foreign exchange market has not only demystified illegal economic behaviours of hoarding, rent-seeking, round tripping and FX holding position, and led to the emergence of exchange rate convergence.”
He noted that the stability in the exchange rate has already started to impact the prices of goods and services positively.
“For instance, the price for international school fees has dropped by 15 per cent; the cost of medical tourism has reduced by 20 per cent, and airfares for local and international trips dipped by 25 per cent.
“The current developments in the foreign exchange market have started reigning in inflation as most necessities’ prices are relatively lower. On a more serious note, the positive impacts include also heightening the public’s confidence in the local currency as it eliminates currency substitution behaviour, which hitherto adds pressure on our local currency,” he stated.
The Naira traded at N1,255 per USD on Saturday, even lower than the N1,269.76 BDCs are urged to sell, according to Gwadabe, who said that the success story never ends.
He referred to the current state of the market as revolutionary and stated that increased foreign portfolio inflows into the economy will result from a stable Naira.
It is impossible to overstate the benefits of the CBN under Cardoso’s recognition of the role that BDCs play in maintaining stable exchange rates, according to Gwadabe.
With rising foreign portfolio investments and inflows of over $1.5 billion just days after the Monetary Policy Committee hiked interest rates by 200 basis points, he indicated that the outlook for forex earnings is positive.
According to him, the apex bank now has the authority to maintain its defense of the local currency because of the rise in foreign exchange inflows into the economy made possible by the CBN’s monetary tools.
“The collaboration between the BDCs, CBN, National Security Adviser, Economic and Financial Crimes Commission (EFCC), and support from the Presidency helped create the opportunity to build the foundation of this achievement. Overall, these actions have induced an atmosphere of public calmness, confidence, hope, and liquidity in the markets.
“Therefore, we call on the CBN to continue calibrating the existing relationship between the BDCs and the apex bank to sustain the success story,” he said.
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