Gwadabe: Naira Gained N660 Since BDCs’ Return to FX Market

The Association of Bureaux de Change Operators of Nigeria (ABCON) has lauded the decision of the Central Bank of Nigeria (CBN) to recall Bureaux De Change (BDCs) into the mainstream FX market as a major factor in ongoing exchange rate stability.

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

Gwadabe said the success story is unending as naira trades at N1,255/$ on Saturday, even lower than N1,269.765 rates BDCs were advised to sell.

Describing the ongoing market development as revolutionary, Gwadabe said stable naira will attract more foreign portfolio inflows to the economy.

He said the naira has appreciated from February low of N1,915/$ to N1,255/$ representing N660 gain, which is significant by all measures.

Gwadabe therefore expressed ABCON’s gratitude to the CBN governor, Olayemi Cardoso 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.

“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 said.

Gwadabe 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 prices of 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.”