BDCS RECALL INTO FOREX MARKET BOOSTED NAIRA RECOVERY

Association of Bureau De Change Operators of Nigeria (ABCON) has said that the recall of Bureau De Change operators (BDCs) into the mainstream forex market is a major factor in the current stability being experienced with the exchange rate.

This disclosure is contained in a statement released by the ABCON President, Aminu Gwadebe, over the weekend where he lauded the Central Bank of Nigeria (CBN) Governor, Olayemi Cardoso, for the decision.

Gwadebe said aside from monetary policy tightening that led to increase in exchange rate, more investment in government instruments, and 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.

ABCON President, therefore expressed the association’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.

Exchange rate stability already having positive impact

Gwadebe said, "The reconsideration of the BDCs into the mainstream foreign exchange market has not only demystified 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 the 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%, cost of medical tourism reduced by 20% and air fares for local and international trips dipped by 25%.

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 behaviour 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 BDCs were advised to sell.

Naira gained N660 between February and March

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.