The Association of Bureau De Change Operators of Nigeria (ABCON) operators have asked the Central Bank of Nigeria to consider approving its bid to provide the forex market with liquidity. This is part of efforts to prevent the Naira from falling further, a trend that has contributed to the country’s inflation.
In a conversation between Nairametrics and ABCON President Aminu Gwadebe, the latter reiterated his group’s relevance in the market. According to him, they are a critical component of the apex bank’s monetary policies.
“I quickly want to advise the apex bank to leverage on the BDCs and allow them access banks’ autonomous window and agency of international money transfer operators. The BDCs are effective tools of the transmission mechanism of the CENTRAL BANK MONETARY POLICIES,”Aminu Gwadebe
Doing so would mean reinstating the 2015 policy guidelines which granted them freedom to offer liquidity at the retail point of the forex market.
Gwadebe claims that allowing Bureau De Change operators to offer liquidity increases the number of players performing that action, thus reducing the chances of price slippage. Essentially, the Naira benefits. Justifying the proposal to reinstate the 2015 guidelines, Gwadebe cited the contributions of Bureau De Change vendors to stabilizing the Naira in 2006, 2009, and 2017.
This appeal follows the announcement by the Acting CBN Governor, Fola Shonubi that President Bola Tinubu had approved a few action plans. The strategies are expected to help stabilize the Naira by tackling some issues, particularly the one in the parallel market.
Regarding the parallel market issue, it’s worth noting that the Naira dropped to N950/$1 last week, a new low. Meanwhile, the CBN-approved rate was N765/$1. Recall that President Tinubu made a handful of announcements upon his inauguration. Among them was the unification of the exchange rate, a move he claimed would greatly improve the Naira’s chances against the dollar.
Despite these policies, the market still faces fluctuations. And that’s where the Bureau De Change operators hope to come in. Gwadebe added that if granted the opportunity to enter the liquidity scene, his organization would ensure they make meaningful contributions. He said “ABCON is continuing strategic alliances with relevant stakeholders to ensure increased liquidity at the retail end market.’’
Diverted diaspora remittances affecting the naira
Last week, Technext reported that Nigeria’s volume of diaspora remittances was on course to hit $26 billion by 2025. Interestingly, the acting CBN governor had something to say about remittance inflows too.
Last week, he said undocumented remittances were responsible for the Naira’s instability. Upon completion of the remittance, the dollars are expected to join the official market. However, Shonubi claimed the remittances are often diverted to the parallel market, making it difficult to stabilize the national currency
Corroborating the claim was ABCON’s head Gwadebe. “All along what we have been telling them we have been vindicated we have seen, this money is not coming, this money is being diverted, this money is left over there and that is why we recommended, let the BDCs terminate the transactions,” he said.
Regarding the issue of undocumented remittances, perhaps it’s time the government considers regulating the sector. With regulation comes order and fairness. Having both qualities in the parallel market should play a vital role in stabilizing the exchange rate.
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