The Association of Bureaux de Change Operators of Nigeria (ABCON) has highlighted the positive impact of the recovery of the naira on the prices of goods and services in the country. Aminu Gwadebe, the president of ABCON, praised the Central Bank of Nigeria (CBN) for enabling Bureaux de Change to function in the foreign exchange market, a move that was crucial to the naira’s rebound.
It is important to note that the CBN had previously banned the operations of BDCs in 2001 as part of measures to stabilize the local currency. However, due to the efforts of ABCON in advocating for the formal operation of BDCs in the currency market, the apex bank reinstated BDCs in the official forex market in February.
According to Gwadebe, the reintroduction of BDCs into the forex market, along with other monetary policy measures such as interest rate hikes and the clearance of forex backlog forward commitments, has led to increased dollar liquidity at the retail end of the forex market. This development has resulted in a relative decrease in the prices of goods and services, thereby reining in inflation.
The positive impacts of the naira’s recovery extend beyond price stability. Gwadebe emphasized that it has also boosted public confidence in the local currency, eliminating currency substitution behavior that previously added pressure on the naira. Additionally, the reintroduction of BDCs has demystified illegal economic behaviors such as hoarding, rent-seeking, round-tripping, and holding excessive foreign exchange positions. This has ultimately led to exchange rate convergence.
Gwadebe further highlighted specific sectors that have benefited from the naira’s recovery. He mentioned that the price of international school fees has dropped by 15%, the cost of medical tourism has reduced by 20%, and airfares for local and international trips have dipped by 25%. These reductions in costs are a direct result of the stability and strength of the naira.
The success story of the Naira’s recovery is ongoing, with the currency trading at 1,255 naira to the dollar, lower than the advised selling rate for BDCs. Gwadebe described the ongoing market development as revolutionary and emphasized that a stable naira would attract more foreign portfolio inflows to the Nigerian economy.
The president of ABCON acknowledged the efforts of the CBN, under the leadership of Governor Dr. Olayemi Cardoso, in recognizing the power of BDCs in securing stable exchange rates. He also highlighted the positive impact on Nigerians living in Dubai, as the rapid recovery of the naira against the dollar has put an end to the practice of bringing dollars home for sale at high rates.
Looking ahead, Gwadebe expressed optimism about the prospects for forex earnings, with foreign portfolio investments on the rise and significant inflows into the economy. He called on the CBN to continue the existing relationship between BDCs and the apex bank to sustain the success story and maintain market stability.
The naira’s recovery and the positive impact it has had on prices and confidence in the local currency are significant achievements for Nigeria. The collaboration between ABCON, the CBN, the National Security Adviser, the Economic and Financial Crimes Commission, and the support from the Presidency have all contributed to building the foundation for this success. Overall, these actions have created an atmosphere of calmness, confidence, hope, and liquidity in the markets, which is crucial for the country’s economic growth and development.
