The Association of Bureaux de Change Operators of Nigeria (ABCON) an umbrella body of the Central Bank of Nigeria (CBN)- licensed Bureaux de Change (BDCs) has lauded the decision of the Olayemi Cardoso-led CBN to recall BDCs into the mainstream FX market as a major factor in ongoing exchange rate stability.
In a statement released at the weekend, ABCON President, Alhaji (Dr) Aminu Gwadave, said aside monetary policy tightening that led to increase exchange rate and more investment in government instruments, the clearance of $7 billion forex backlog forward commitments, the recall of the BDCs was also a significant move by the apex bank to boost dollar liquidity at the retail end of the forex market.
Gwadabe therefore expressed ABCON’s gratitude to the Cardoso-led CBN and other related agencies for the recognition of BDCs as the third leg of the foreign exchange market and an effective exchange rate transmission mechanism in forex management.
He said: “The reconsideration of the BDCs into the main stream foreign exchange market has not only demisfied illegal economic behaviours of hoarding, rent seeking, round tripping and FX holding position, and led to the emergence of exchange rate convergence.
He said that the stability in exchange rate has already started to have positive impact on the prices of goods and services. For instance the price for international school fees has dropped by 15 per cent; cost of medical tourism reduced by 20 per cent and air fares for local and international trips dipped by 25 per cent.
He said: “The current developments in the foreign exchange market has started reigning in inflation as prices of most necessities are becoming relatively lower in the market. In a most serious note, the positive impacts include also heighten confidence of the public in the local currency as it eliminates currency substitution behavior which hitherto being adding pressure on our local currency”.
Gwadabe said the success story is unending as naira trades at N1,255/$ on Saturday, even lower than N1,269.765 that the rates BDCs are advised to sell.
Describing the ongoing market development as revolutionary, he said stable naira will attract more foreign portfolio inflows to the economy.
Gwadabe said the naira has appreciated from February low of N1,915/$ to N1,255/$ representing N660 gains for the naira, which is significant by all measures.
Gwadabe said the gains of the CBN under Cardoso to recognise the power of BDCs in securing stable exchange rate can not be over emphasised.
He also said tha previous practice where Nigerians took dollars from Nigeria for Hawala activities have seized as the reverse is the case where the purchase of dollars in Dubai is cheaper than in Nigeria and therefore created a Buisiness opportunity for dollars inflows rather than outflows to the economy.after the rapid recovery of the naira against dollar.
Going forward, he said that prospects for forex earnings are promising, with foreign portfolio investments on the rise and over $1.5 billion inflows few days after Monetary Policy Committee raised interest rate by 200 basis points.
He said increases in foreign exchange inflows into the economy through the CBN’s monetary instruments is helping to boost foreign reserve accretion and gives the apex bank the necessary power to continue to defend the local currency.
”It is our view that the collaboration between the BDCs, CBN , National Security Adviser, Economic and Financial Crimes Commission (EFCC), as well as support from the Presidency helped in creating the opportunity for building the foundation of this achievement. Overall the combination of these actions have induced an atmosphere of public calmness, confidence, hopes and liquidity in the markets.
We call therefore on the CBN to continue to calibrate the existing relationship between the BDCs and the apex bank to sustain the success story,” he said.
In response to the recent reforms in the financial industry Abcon reiterates it resolved to ensure that its continue with the collaboration with the cbn to carry all its members in achieving a win win situation to avoid Exclusion and hijack of the sector by the big boys in the process and of safeguarding of our members investments, skills, capacity, loss of capital and unintended consequence of unemployment and worsening insecurities.
