The gradual recovery of the nation’s currency, the naira, in the last few weeks has been attributed to more investment in government instruments, clearance of $7 billion forex backlog forward commitments and the recall of the BDCs at the retail end of the forex market.
The Association of Bureaux de Change Operators of Nigeria (ABCON), who disclosed this on Monday, specifically lauded the decision of the Olayemi Cardoso-led Central Bank of Nigeria (CBN) to recall BDCs into the mainstream FX market, describing it as a major factor in ongoing exchange rate stability.
Dr. Aminu Gwadabe, ABCON President, was full of gratitude to the Cardoso-led CBN and other related agencies for the recognition of BDCs as the third leg of the foreign exchange market and an effective exchange rate transmission mechanism in forex management.
He said, “The reconsideration of the BDCs into the mainstream foreign exchange market has not only demystified illegal economic behaviours such as hoarding, rent seeking, round tripping and FX holding position, but also led to the emergence of exchange rate convergence.”
Gwadabe said that the stability in the exchange rate has already started to have a positive impact on the prices of goods and services.
He noted that for instance the price for international school fees has dropped by 15 percent; cost of medical tourism reduced by 20 percent and prices of air fares for local and international trips dipped by 25 percent.
“The current developments in the foreign exchange market has started reining in inflation as prices of most necessities are becoming relatively lower in the market. In a more serious note, the positive impacts include also heightened confidence of the public in the local currency as it eliminates currency substitution behaviour which hitherto added pressure on our local currency”, he added.
Gwadabe said the success story is unending as naira traded at N1,255/$ on Saturday, even lower than N1,269.765 rates BDCs were advised to sell.
Gwadabe said the success story is unending as naira traded at N1,255/$ on Saturday, even lower than N1,269.765 rates BDCs were advised to sell.