The Association of Bureau De Change Operators of Nigeria (ABCON) has unveiled the reasons behind the Naira’s resurgence against the US Dollar, highlighting the pivotal role played by the Central Bank of Nigeria (CBN) in bolstering the currency.
In a statement released on Sunday in Lagos, ABCON’s President, Alhaji Aminu Gwadabe, pointed out that the Naira’s renewed strength can be largely attributed to the CBN’s dual approach of dollar liquidity injection and Naira mopping through interest rate hikes.
Gwadabe emphasised the significance of this approach, saying, “The development stems from the ‘double-edged sword dollar liquidity injection and the mopping up of the Naira through interest rate hikes.”
He went on to emphasise the importance of this strategy, adding, “What is happening in the market and the continuous Naira rebounds is the manifestation of the CBN’s double-edged sword measures of dollar liquidity injection and Naira mopping through the instrumentality of interest rate hikes. It is a good development as it is a greater risk to speculate, hoard, and substitute Naira for other currencies.”
While recognising the positive impact, the ABCON President acknowledged the role of speculators and the need for continued sustainability. He noted, “The speculators are usually interested in the elements of sustainability of the feat so far achieved, arguing that it is panic selling as against panic buying.”
Gwadabe urged the management of the Central Bank of Nigeria to maintain transparency and consider the recommendations put forth by the association to ensure the stability of the Naira in the foreign exchange (FX) market.
Among these recommendations, he highlighted the importance of including the Bureau De Change operators in the foreign exchange market, stressing their role in serving the needs of the critical retail sector. “The BDCs are necessary in the demand measures of the apex bank, transaction monitoring mechanism, and client utilization with correcting and moderating potentials,” Gwadabe emphasized.
The financial expert also discussed the country’s rising reserves, which he attributed to the increased demand for crude oil, a major export commodity for Nigeria. He noted, “This is due largely to the U.S. increasing inventories and the escalation of tension in the Middle East.”
Gwadabe urged caution in any attempts to destabilise the Naira, as the CBN appears committed to sustaining the progress achieved in the FX market. He stated, “As we continue to observe developments, there is a need to exercise caution in attacking the Naira as it all appears that the CBN seems poised to sustain the gains already recorded in the market.” The Naira’s newfound strength against the Dollar reflects the positive impact of the CBN’s strategic approach, marking a promising trend for the country’s currency.