The Association of Bureau De Change Operators of Nigeria (ABCON), has revealed why the naira is regaining strength against the dollar.
“The development stems from the ‘double-edged sword dollar liquidity injection and the mopping up of the naira through interest rate hikes,” its President, Alhaji Aminu Gwadabe, said in a statement on Sunday in Lagos.
“What is happening in the market and the continued naira rebounds is the manifestation of the CBN double-edged sword measures of dollar liquidity injection and naira mopping through the instrumentality of interest rates hikes.
“It is a good development as it is a greater risk to speculate, hoard and substitute naira for other currencies,” Gwadabe said.
The ABCON boss, however, said that 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 CBN to continue to make clarifications and implement some of the association’s recommendations in charting a way forward for naira stability in the FX market.
Among the recommendations, he said, is the inclusion of the BDCs in the foreign exchange market in view of their roles in meeting the needs of the critical retail end sector.
“The BDCs are necessary in the demand measures of the apex bank, transaction monitoring mechanism and clients utilisation with correcting and moderating potentials,” Gwadabe said.
The financial expert said that the country is experiencing increasing reserves due to increased demand for crude oil, its major export commodity.
“This is due largely to the U.S. increasing inventories and the escalation of tension in the Middle-East,” he explained.
"As we continue to observe developments, there is the need to exercise caution in attacking the naira aira as it all appears that the CBN seems poised to sustain the gains already recorded at the market,” Gwadabe said.