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BDCs warn forex speculators of losses, set to resume full operations

...erring members to burn fingers over rising reserves

The Association of Bureaux De Change Operators of Nigeria (ABCON) has warned its members and forex speculators putting pressure on the naira exchange rate to stop such activities or risk losing their money.

ABCON President, Aminu Gwadabe who disclosed this yesterday in Lagos said the Central Bank of Nigeria (CBN)-licensed Bureaux de Change (BDCs) will soon start full operations as the apex bank will soon reopen dollar sales to operators.

According to Gwadabe, with the CBN’s planned lifting of moratorium on dollar sales to BDCs, reopening of the airports for air travels, global ease on restriction of movement are positive indications that dollar flows to the economy will soon improve.

He said the naira was yesterday evening exchanging at N461 to dollar at the parallel market but will be upbeat once dollar sales to BDCs commence.

“The return of over 5,000 BDCs to the forex market will add great strength to the Naira and lead to major capital losses for forex speculators. It happened in 2016 and will happen again in 2020. The return of the BDCs will immediately boost Naira recovery and put the enemies of the economy to shame. We are committed to the CBN’s exchange rate stability and will take all necessary steps within set rules and regulations to keep the naira stable,” he assured.

Gwadabe said the return of BDCs to the forex market will help chase away speculators, curb rising inflation, boost productivity and employment, enhance price discovery, enhance market transparency and competitiveness.

Continuing, the ABCON boss said the uptick in activities in the Chinese economy has raised the country’s crude oil demand which will impact positively on Nigeria’s crude oil sales to the Asian country and boost dollar earnings.

Gwadabe added that the CBN has created enhanced fiscal buffers with the $3.4 billion International Monetary Fund (IMF) loan under the Rapid Financing Instrument (RFI) meant for Nigeria to meet its urgent balance of payment stemming from the outbreak of the COVID-19 pandemic. He said the loan, which has been disbursed, will also boost Nigeria’s dollar reserves and financing to the budget for targeted and temporary spending increases.

The loan, he added, will help in containing and mitigating the economic impact of the COVID-19 pandemic and of the sharp fall in international oil prices thereby putting the Naira in a better standing against other currencies.

The ABCON boss said Nigeria’s foreign reserves have reached over $35 billion, which represents enough buffers for the CBN to deal with any act of illegal economic behaviour like hoarding, speculation, conversion of local assets among other illicit financial activities.

Gwadabe also added that the OPEC measures on sustainable price stability are commendable as many governments across the world have agreed to oil production adjustment targets and continued collaboration with all their partners, a move that will benefit Nigeria.

He said the CBN has also officially reviewed the naira exchange rate to N380 to a dollar. Aside devaluing the naira, the apex bank also adopted a unified exchange rate, and pushed the official rate of the naira to N376 to dollar for International Money Transfer Operators rate to banks; N377 to dollar for banks’ dollar sale to CBN and pegged CBN’s dollar sales to banks at N378, all aimed at attracting Foreign Portfolio Investment and strengthening the local currency. The BDC operators are expected to buy dollar from the CBN at N378 per dollar.

Gwadabe said the naira rate review and assurances by the CBN Governor, Godwin Emefiele to foreign investors that want to repatriate their funds from the country are positive for the naira continued recovery.

“The apex bank has put in place policies to ensure an orderly exit for foreign investors that might be interested in doing so and has also urged investors to be patient as such repatriations are processed, owing to the bank’s policy of orderly exit of investments. The CBN has continually kept its promises to foreign investors and that confidence will play in Nigeria’s favor,” Gwadabe said.

He said the Federal Government’s plan to revise the 2020 budget oil benchmark to $20 per barrel will make more foreign capital available for economic development and strengthening of the Naira.

Gwadabe commended efforts by the Federal Government in curbing COVID-19 pandemic including several initiatives by the CBN meant to boost the real sector growth and attract more foreign capital to the economy.

He assured the CBN that ABCON and its members, remained committed to supporting the regulator in realizing its exchange rate stability mandate and ensuring transparent market operations built on regulatory compliance and zero tolerance for market abuse.

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