The Association of Bureau de Change Operators of Nigeria (ABCON) attributes the stability in the exchange rate to the recall of its members into the foreign exchange (FX) market, according to a statement by Aminu Gwadabe, ABCON president.
Gwadabe highlights significant improvements in Nigeria’s FX market, including the clearance of a $7 billion FX backlog and increased investment in government instruments due to monetary policy tightening. He acknowledges the Central Bank of Nigeria’s (CBN) decision to recall Bureau de Change (BDCs) operators as a vital move to enhance dollar liquidity at the retail end of the market.
The return of BDCs to the mainstream FX market has curtailed illegal economic activities such as hoarding and round-tripping, resulting in exchange rate convergence and increased public confidence in the local currency, Gwadabe notes.
The positive impact of exchange rate stability is evident in reduced costs for international school fees, medical tourism, and airfares for local and international trips. The naira trading at N1,255/$ on Saturday reflects the success of these interventions, below the advised rate of N1,269.765 for BDCs.
Gwadabe emphasizes the collaborative effort between BDCs, CBN, and other relevant agencies, which has fostered an atmosphere of confidence, hope, and liquidity in the markets. He urges the CBN to sustain this success by maintaining a favorable relationship with BDCs.
The ABCON president predicts that a stable naira will attract more foreign portfolio investments, citing promising prospects for FX earnings and increased foreign reserve accretion. He reaffirms ABCON’s commitment to collaborating with the CBN to ensure mutual benefits for all members and prevent exclusion and dominance by larger entities.
On February 27, CBN approved the sale of FX to BDCs, citing observed price distortions at the retail end of the market, which contributed to exchange rate premium widening.
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Reporting by David Okoroafor, News Writer in Lagos, Nigeria.
