Dr. Aminu Gwadabe, President of the Association of Bureaux De Change of Nigeria (ABCON), shares his perspectives on the recent depreciation of the Naira and proposes solutions for achieving foreign exchange stability in Nigeria:
The recent decline in the Naira’s value has raised concerns. Investigations reveal several factors contributing to this trend:
Unfounded Speculation: After the Naira strengthened to below N1000/$, some individuals began buying dollars from the open market and selling them at interbank windows, creating demand pressure on the Naira.
Online Platform Activities: Traders on online platforms have exerted pressure on the open market, dumping dollars on these platforms, where the Naira has been undervalued.
Liquidity Shortage: The retail end market faces an acute liquidity shortage, leading to volatility.
Role of Bureaux De Change (BDCs)
BDCs play a crucial role in the CBN’s foreign exchange policies. Their collaboration with the central bank has facilitated exchange rate unification and Naira appreciation. BDCs cater to the invisible demand for foreign exchange, such as school fees, medical expenses, and travel allowances, helping to converge open market rates and NAFEM rates.
Combating Currency Speculation
Gwadabe dismisses accusations that BDCs are primarily responsible for the Naira’s woes. He emphasizes the need to address the larger market segments where currency speculation is prevalent.
Addressing Cryptocurrency Platforms
Gwadabe highlights the drawbacks of cryptocurrency platforms like Binance, stating that their volatility can erode the value of local currencies.
ABCON’s Plan for Retail Market Harmonization
ABCON aims to digitalize and centralize the retail end FX market to combat undocumented and unregistered platforms. The unified platform will enable price discovery, market intelligence, and regulatory supervision.
To restore the Naira’s value to below N1,000 per Dollar, Gwadabe advocates for enhanced collaboration between the CBN and BDCs, combating currency speculation, addressing the role of cryptocurrency platforms, and implementing ABCON’s plan for retail market harmonization. These measures aim to stabilize the foreign exchange market and support economic growth in Nigeria. CONTINUE READING
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