The naira has in over 18 months remained stable at both the official and parallel markets despite several odds facing it ahead of the 2019 general elections, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has said.
Speaking recently to financial journalists in Lagos, the ABCON boss commended the Central Bank of Nigeria (CBN) financial sector reforms and the contributions of the Bureau de Change (BDC) operators to the current exchange rate stability, as against the common practice of currency devaluations and depreciations across the world at election times.
The naira exchanges at N306/$ in the official market and N358/$ in the parallel market despite the election fears.
Gwadabe said that the absence of foreign exchange spikes and volatility before and during the 2019 election year is a major achievement by CBN and the Federal Government. He said: “The dexterity of the government policies in ensuring that naira remained stable in an election year is commendable. Election years, as witnessed during the 2015 general elections, are marred by exchange rate volatility and spikes in the market.”
He disclosed that financial pundits had in early 2016, speculated that the naira would depreciate to as low as N1000/$. The election period of 2015, he added, witnessed over $100 billion capital flight outside the country. The activities of currency hoarders, speculators and rent seekers reached its peak in 2015.
He disclosed that ironically, the trend in the foreign exchange market during this year’s election showed hope for the economy, sustained exchange rate stability, adequate dollar liquidity, increasing foreign capital inflows and most importantly, a unified and convergent exchange rate of BDCs and the parallel market. These feats, he said, are commendable by all standards.
On deepening capacity/skills of industry operators, Gwadabe appealed to CBN to issue Letter of Consent to ABCON proposed training institute. This, he added, is going to boost the current ABCON management’s commitment to capacity building for its members to stimulate competence in the sector and make room for better foreign exchange management.
Continuing, Gwadabe also listed factors that led to the current successes in the foreign exchange market. He said: “First, I want to congratulate the leadership of CBN for a well coordinated, proactive exchange rate management strategies, which include creation of several foreign exchange windows to deepen liquidity and price discovery, restriction of foreign exchange on 42 items that can be produced locally, self-sufficiency in rice production and continuous partnerships between the apex bank and BDCs, all led to the current exchange rate stability enjoyed in the country.”
According to Gwadabe, the contribution of security agents in the effective surveillance of Nigeria’s boarders/airports to checkmate illegal foreign currency evacuation have in no small measure strengthened exchange rate and promoted economic growth.
He also praised BDC operators under the ABCON leadership for staying in the business despite lower margins and risk of operations they face on daily basis.
The ABCON boss said the BDCs have remained resolute in ensuring sustainable and stable exchange rate, price discovery and uniformity in the market pricing for the dollar against the naira.
He said the current one per cent transaction margin that operators take is not sufficient for BDCs’ sustained operation, and totally falls below global standard of 10 per cent.
He said the BDCs under the ABCON leadership have demonstrated patriotism in the business by staying and sustaining it despite several challenges facing the sector.