The Naira, Nigeria’s currency, is currently experiencing a resurgence against the US dollar, and the President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has shed light on the factors contributing to this positive development.
According to Gwadabe, the strengthening of the Naira can be attributed to the dual actions of injecting liquidity into the market and mopping up excess Naira through interest rate hikes. This strategy, implemented by the Central Bank of Nigeria (CBN), has led to a significant rebound in the value of the Naira.
“This current market trend is a result of the CBN’s strategic measures of injecting dollar liquidity into the market while simultaneously controlling the supply of Naira through interest rate hikes,” Gwadabe explained in a statement. He emphasized that this approach presents a greater risk for speculators, discouraging hoarding and the substitution of the Naira for other currencies.
While acknowledging the positive impact of these measures, Gwadabe noted that speculators are concerned about the sustainability of this feat. He clarified that the recent surge in selling pressure on the Naira is primarily due to panic selling rather than panic buying.
Gwadabe urged the CBN to provide ongoing clarifications and implement recommendations put forth by ABCON to ensure the stability of the Naira in the foreign exchange (FX) market. One of the key recommendations is the inclusion of Bureau De Change operators in the FX market, as they play a critical role in meeting the needs of the retail sector.
“The involvement of Bureau De Change operators is necessary in the demand-side measures of the apex bank, transaction monitoring mechanisms, and client utilization, with corrective and moderating potentials,” Gwadabe emphasized.
As for the reasons behind the increasing foreign reserves of Nigeria, Gwadabe attributed it to rising global demand for crude oil, the country’s major export commodity. He explained that the increase in US inventories and escalating tensions in the Middle East have contributed to this positive situation.
While cautioning against attacking the Naira, Gwadabe expressed optimism that the CBN is committed to sustaining the gains already achieved in the market. As the situation continues to unfold, it is vital to exercise prudence and observe further developments.
Overall, the explanation provided by ABCON’s President sheds light on the factors supporting the recent strength of the Naira against the US dollar. With ongoing efforts by the CBN and the inclusion of Bureau De Change operators in the FX market, it is hoped that the Naira will continue to exhibit resilience and stability in the future.
NAN
