•Naira consolidate gains, inches close to N1,200/$

The Association of Bureaux de Change Operators of Nigeria (ABCON) has lauded the decision of Olayemi Cardoso-led Central Bank of Nigeria (CBN) to bring back bureau de change (BDC) operators into the mainstream FX market as a major factor driving exchange rate stability.

This comes as the naira continues to consolidate on its gain, inching towards N1200/$ as of the weekend. In both Lagos and Abuja, the naira was quoted at around N1250/$.

In a statement released yesterday, ABCON President, Dr Aminu Gwadabe, said aside from monetary policy tightening that led to an interest rate hike, more investment in government instruments and the clearance of $7 billion foreign exchange (FX) backlog, the recall of the BDCs has significantly boosted dollar liquidity at the retail end of the market.

Gwadabe expressed ABCON’s gratitude to the CBN and other related agencies for the recognition of BDCs as the third leg of the FX market and an effective exchange rate transmission mechanism in the chain.

“The reconsideration of the BDCs into the mainstream FX 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.”

Gwadabe said the stability in the exchange rate has started to have a positive impact on the prices of goods and services.

“For instance, the price for international school fees has dropped by 15 per cent; the cost of medical tourism has reduced by 20 per cent and prices of airfares for local and international trips dipped by 25 per cent.

“The current development in the FX market has started reigning in inflation as prices of most necessities are becoming relatively lower in the market. On a more serious note, the positive impacts include heightened confidence of the public in the local currency as it eliminates currency substitution behaviour, which hitherto had been putting pressure on local currency,” he said.

Gwadabe said the success story is unending as the naira traded at N1,255/$ on Saturday, even lower than N1,269.76 BDCs were advised to sell.

Describing the ongoing market development as revolutionary, Gwadabe said stable naira would 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.

Going forward, he said, prospects of FX earnings are promising with foreign portfolio investments on the rise and over $1.5 billion inflows a few days after the Monetary Policy Committee (MPC) raised the interest rate by 200 basis points.