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Economy

ABCON Takes Glory for Naira Appreciation at FX Market

By Adedapo Adesanya

The Association of Bureaux de Change Operators of Nigeria (ABCON) has said the decision of the Central Bank of Nigeria (CBN) to recall its members into the mainstream foreign exchange (FX) market has been responsible for the current exchange rate stability.

In a statement, ABCON President, Mr Aminu Gwadabe, said aside from monetary policy tightening that led to interest rate hikes, more investment in government instruments and clearance of $7 billion forex backlog forward commitments, the recall of the BDCs has significantly enhanced dollar liquidity at the retail end of the forex market.

Mr Gwadabe said the success story is unending as the Naira traded at N1,255/$ on Saturday, even lower than the N1,269.765 rates BDCs were advised to sell by the apex bank

He described the ongoing market development as revolutionary and said the stable Naira would attract more foreign portfolio inflows to the economy, noting that the country’s legal tender has appreciated from its February low of N1,915/$ to N1,255/$. representing a N660 gain, which is significant by all measures.

Mr Gwadabe also expressed ABCON’s gratitude to the CBN governor, Mr Yemi Cardoso, and other related agencies for recognising BDCs as the third leg of the FX market and an effective exchange rate transmission mechanism in forex management.

“The reconsideration of the BDCs into the mainstream 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 said.

Mr Gwadabe said that the stability in the exchange rate has already been positively impacting the prices of goods and services. For instance, the price of international school fees has dropped by 15 per cent; the cost of medical tourism has reduced by 20 per cent and prices of air fares for local and international trips dipped by 25 per cent.

“The current developments in the foreign exchange market have started reigning in inflation as prices of most necessities are becoming relatively lower in the market. On a most serious note, the positive impacts include also heightened the confidence of the public in the local currency as it eliminates currency substitution behaviour which hitherto being adding pressure on our local currency,” he noted.

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