By Uche Amunike
The President, Association of Bureau de Change Operators of Nigeria (ABCON), Aminu Gwadabe, has confirmed that the Naira has appreciated from N1,915 per dollar to N1,255 per dollar, recording a N600 boost, as a result of the decision of the Central Bank of Nigeria (CBN), to recall Bureau de Change (BDCs) to mainstream foreign exchange markets as a way of stabilizing the ongoing exchange rate.
Speaking, through a statement signed by Gwadabe, he stated that apart from monetary policy tightening, which led to the rise in interest rate and more investment in government instruments and clearance of $7 billion foreign exchange backlog forward commitments, recalling the BDCs significantly boosted dollar liquidity at the retail end of the foreign exchange market.
According to him, the success story continues as the Naira trades at an even lower rate, which the BDCs were advised to sell on Saturday. He further described the current market development as revolutionary, adding that if the Naira is stable, it will attract more foreign portfolio inflows to the economy. He also explained that prospects of foreign exchange earnings are encouraging with over $1.5 billion inflows were experienced a few days after the Monetary Polucy Committee (MPC) raised the interest rate by 200 basis points.
Aminu Gwadabe, while stating how pleased their association was, expressed his gratitude to the Governor of the apex bank, Olayemi Cardoso, as well as other related agencies for recognizing the BDCs as the third wheel of the foreign exchange market and an effective exchange rate transmission mechanism in foreign exchange management.
Hear him: ‘The reconsideration of the BDCs into the main stream foreign exchange market has not only demystified illegal economic behaviours such as hoarding, rent seeking, round tripping and FX holding position, but also led to the emergence of exchange rate convergence.’
He explained that the stability in exchange rates already started to show get positive impact on the prices of goods and services. He used International School fees as an example, stating that they have currently dropped by 15% And that the cost of medical tourism has reduced by 20%, just as the prices of airfares for local and international trips have also dropped by 25%.
Aminu Gwadabe further encouraged the CBN to nurture the present relationship they enjoy with the BDCs, so as to sustain the success they have so far attained.
His words: ‘Overall the combination of these actions have induced an atmosphere of public calmness, confidence, hope and liquidity in the markets. We therefore call on the CBN to continue to calibrate the existing relationship between the BDCs and the apex bank to sustain the success story.’
‘The current developments in the foreign exchange market has started reigning in inflation as prices of most necessities are becoming relatively lower in the market. In a most serious note, the positive impacts include also heighten confidence of the public in the local currency as it eliminates currency substitution behavior which hitherto being adding pressure on our local currency.’
