ABUJA, NOVEMBER 27, 2018 – The stability of the local currency was linked to measures instituted by the Central Bank of Nigeria (CBN) and the Association of Bureaux De Change (BDC) Operators of Nigeria (ABCON) to ensure that foreign exchange demand at the retail end of the market was met.
ABCON President Aminu Gwadabe told financial reporters in Lagos at the weekend that despite huge campaign spendings, the CBN spot rate/official exchange rate closed last week at N306.75/$1 from N306.70/$1 in the prior week.
The exchange rate at the Investors & Exporters Forex window closed at N364.70/$1. At the parallel market and Bureaux De Change (BDCs) segment, the naira traded at N363/$1 throughout the week.
The measures initiated by the CBN, including the sustenance of dollar supply to over 4,000 Bureau De Change (BDC) operators through the International Money Transfer Operations (IMTOs) forex window, have helped the local currency.
The apex bank had earlier warned that the economy faced inflation and financial stability risks over the short-to medium-term if huge election spending is not checked.
The regulator believed that if excess liquidity was allowed to build up, the demand for foreign exchange could shoot up in the second half of this year and throw the naira exchange rate out of equilibrium.
Gwadabe said: “The naira remains stable despite political campaign spendings by political parties across the nation. The strategic partnership, actions and pre-actions of the Central Bank of Nigeria and the ABCON have stopped distortions to the exchange rate due to ongoing politicking and campaign spendings in the country.”
Continuing, he said the determination of the apex bank to maintain the IMTOs forex window for the over 4,000 BDCs on weekly basis has brought steady liquidity in the market and discouraged unethical market behaviours like hoarding, speculation and frivolous demand.
Gwadabe said that on its part, ABCON has ensured that its members continue to make dollar accessible to critical end-users like travelers demanding personal and business travel allowances, school fees and medical bills payment abroad among others.
He said the ongoing ABCON automation and configuration of soft token for forex return rendition by over 4,000 BDCs nationwide will enhance transparency and financial integrity of the operators.
“This feat will no doubt strengthen the effectiveness of the technical compliance of the anti-money laundering and counter terrorism financing laws and help Nigeria’s assessment into the Financial Action Task Force coming up next year.” he stated.
The ABCON boss was impressed that increased surveillance by the security agencies on illicit financial flow and controls at the nation’s borders have enhanced the stability in the market.
He said that the secondary market currently enjoys huge confidence making it difficult for forex speculators and illegal forex dealers to manipulate the market.
Gwadabe identified IMTOs operation as part of the efforts by the apex bank to liberalise the forex market, boost liquidity and make dollar more readily available to low end users.
He lauded the apex bank for continuously providing an enabling environment for IMTOs and BDCs which has in no small measure, deepened availability of forex at the retail end of the market.
He explained that although declining global oil prices should fundamentally lead to massive depreciation of the naira, but the commitment of the CBN to the defence of the naira keeps providing stability for exchange rates at different segments of the forex market.
Gwadabe said the coming of I&E Forex Window, was also part of CBN’s efforts to further develop the Nigerian forex market and improve market structure.
On regulatory compliance, Gwadabe said the licensed BDCs are committed to naira’s stability at both official and parallel markets and have consistently partnered with the CBN to achieve this objective.
Gwadabe said: “The CBN-licensed BDCs have always played collaborative and positive roles for the regulator in achieving exchange rate stability. Besides, CBN’s admission of licensed BDCs into the International Money Transfer Operators- IMTOs-Window has continued to keep the naira stable.
“ABCON has continuously assured the CBN and taken appropriate measures to ensure that purchased funds are disbursed to end users and for eligible transactions only.
“We also render weekly returns on purchases from the banks to Trade and Exchange Department of the apex bank. We also ensure strict compliance to the provisions of the anti-money laundering laws observance of appropriate Know-Your-Customer principles in the handling of forex transactions.” The ABCON chief reiterated the need for the forex users to deal with CBN-licensed BDCs only, and urged the public to report errant operators for necessary sanction.
