The Association of Bureaux De Change Operators of Nigeria (ABCON) has again called on the Central Bank of Nigeria (CBN) to review the exchange rate band at which Bureaux de Change (BDCs) members buy dollars.
ABCON President, Aminu Gwadabe, who said the call was to align with commercial banks’ buying rate, spoke to financial journalists in Lagos, ahead of the 261st meeting of the Monetary Policy Committee (MPC) slated for today and tomorrow at the CBN headquarters Abuja. He stated that BDC operators still buy dollars from International Money Transfer Operators (IMTOs) as directed by the CBN at N360/$ and sell at N361.5/$, whereas commercial banks buy at N357/$ and sell at N360/$, urging the apex bank to merge both rates to achieve market harmony and level playing field for all stakeholders.
The ABCON chief noted that the underlying market intrigues and political anxieties in the country are pointers that the CBN needs to listen to ABCON’s demand and merge both rates in the interest of the naira and economy, adding that leaving the rates as it is presently will not ensure healthy competition at both ends of the market.
He added that the ongoing losses being recorded in the equities market where over N700 billion has been lost in recent weeks, as well as speculative tendencies among big foreign exchange players, will not stop to constitute big threat for exchange rate stability.
As stated by him, the rising naira liquidity, high demand for dollars in the travel seasons, payment for school fees for students studying abroad and rising forex demand at the retail end of the market remain big concerns for exchange rate stability.Gwadabe however stated that despite the near gloomy picture painted above, all hopes are not lost on the state of the economy, market and CBN’s goal of achieving exchange rate stability.
He cited the growing fiscal buffers, which have seen the foreign exchange reserves hit $47.8 billion and the financial discipline seen in current administration as big plus for the economy and naira’s stability.He also stated that rising oil prices will not stop to arm the CBN with required ammunition to tackle any act that will hurt the system. Oil prices are projected to hit $85 per barrel by July and have remained above $78 per barrel in the last few days.
The ABCON boss explained that although the level of foreign reserves is still significantly below the record high of $64 billion recorded in August 2008, it is nearly double the low of $24 billion recorded in October 2016, increasing by more than $23 billion in a nearly 17 months.
He also attributed the new foreign reserves level to two sizeable Eurobonds, a small Diaspora bond issue, the recovery in oil export revenues and the steady bid by the CBN at the I&E Forex window.
Gwadabe disclosed that prior to the current stability in the forex market and naira, the economy had previously witnessed depressed Gross Domestic Product (GDP) growth, which culminated in a recession in 2016. Inflation also rose rapidly and peaked at almost 19 per cent in January 2017 and persistently rising unemployment rate to 14.23 per cent in 2016 fourth quarter from 6.41 per cent as at 2014 fourth quarter.
There was also a significant depreciation of the exchange rate, reaching N525/$1 in February 2017 until the CBN took major decisions that corrected these anomalies.Some of the decisions, he said, include a cycle of monetary tightening to rein in inflation; external reserves management through the restriction of foreign exchange for imports of goods that can be produced in Nigeria and the withdrawal of subsidy for the importation of 41 non-essential commodities with unfolding successes.
“The CBN also introduced various policies to eliminate foreign exchange speculators, bettors, round-trippers and rent-seekers and these have stabilized the naira and also brought stability to the foreign exchange market,” he said.He said these steps are indications that the apex bank has a listening ear and therefore, urged the CBN to listen to BDC operators’ demand that the forex buying rates for banks and BDCs be merged to promote mutual confidence in the sector.