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Make radical changes in sourcing FX for the economy, ABCON advises CBN

Lagos, FCT attracted $3bn foreign investments in Q1 2024 | 34 states recorded zero Lagos, FCT attracted $3bn foreign investments in Q1 2024 | 34 states recorded zero

The Association of Bureau De Change Operators of Nigeria (ABCON) has asked the Central Bank of Nigeria (CBN) to undergo a paradigm shift in sourcing foreign exchange for the economy.

Aminu Gwadabe, ABCON’s president, spoke during an interview with NAN on Sunday while highlighting the importance of sustaining the current momentum in curbing naira volatility and improving economic growth.

He said the current naira-to-dollar exchange rate is great and shows the CBN has the muscles and arsenal to protect the value of the local currency.

“In summary, that is my observation: the increasing resilience, capacity, and arsenal of the Central Bank of Nigeria to defend our local currency through several measures,” Gwadabe said.

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“My advice is for them to continue widening and undergo a paradigm shift in sourcing foreign exchange for the economy.”

SETTLEMENT OF FX BACKLOG STRENGTHENING NAIRA

Gwadabe also underlined the importance of resolving valid foreign exchange (FX) backlogs to improve market stability and attract international investments.

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He said clearing all valid foreign exchange backlog was a good development in the forex market, giving the naira a positive outlook and attracting foreign investors.

“We are also seeing how they are using the securities to attract foreign investments, which are oversubscribed. That is also having a lot of positive impact on the exchange rate,” he said.

“We have also seen how they took the bold decision to reinstate the BDCs window to deepen the market, which has broken the camel’s back.”

He said the reinstatement of the BDCs has positively influenced the FX market.

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Gwadabe said such decisions by the CBN instilled confidence in the market, as reflected in the strengthening of the naira against major foreign currencies.

On March 18, the naira traded N1,610 against the dollar at the parallel section of the FX market but closed at N1,470/$ on March 22.

At the official window, the local currency traded at N1,572.86 on March 18 but closed at N1,431.49/$ on March 22.

Also, Gwadabe commended the CBN on its recent reforms to boost the economy and its continued efforts in taming inflation.

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He said effective collaboration between the government and the CBN was pivotal to achieving sustainable economic stability.

Gwadabe also reiterated the role of BDCs in moderating market volatility and emphasised the importance of considering them as critical partners in efficiently implementing monetary policy.

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He, therefore, urged the monetary policy committee (MPC) to adopt proposed reforms by ABCON, including granting preferential treatment to BDCs to increase their capacity and ensure their contributions to market stability are maximised.

ABCON PREDICTS INTEREST RATE HIKE

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Ahead of the MPC meeting slated for March 25 and 26, Gwadabe predicted a further increase in interest rates by the committee to address the persistent inflation rate.

At its last meeting on February 27, MPC raised the monetary policy rate (MPR), which benchmarks interest rates, from 18.75 percent to 22.75 percent.

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Also, according to the National Bureau of Statistics, the headline inflation rate rose to 31.7 percent in February — up from 29.9 percent in January.

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