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The unorthodox foreign exchange policy of the Central Bank of Nigeria (CBN) is adversely impacting the naira exchange stability across all markets, having created huge premium between official and parallel market rates, President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has said.
Gwadabe, who spoke in a chat with financial journalists in Lagos, explained that with the official market rate now at N430/$ and parallel market rate at N730/$, a huge rate gap of N300/$ exists in the markets.
For him, the selling of forex earnings at a fixed rate of N430/$ while open market rate is N730/$ is an unorthodox practice that lacks credibility and transparency.
“That singular act encourages rent seeking, currency substitution that continues to hurt real sector operators and the overall economy,” he said. He recalled that when the apex bank decided to suspend sales of forex to Bureau De Change (BDCs), in July 2021, the open market rate was about N501/$.
Over a year after, the naira to the dollar has depreciated significantly with a lot of Nigerians not meeting their invisible transaction needs while the regulator fails to show much commitment to meeting those needs.
Gwadabe, said the small retail exchange institutions – BDCs- remain at the centre of CBN’s exchange rate policies implementation, hence the need for regulatory and public continuous support BDCs’ roles in exchange rate stability.
This, he added can be achieved through increased automation of their processes and providing more channels of transactions for sustainable price equilibrium while eradicating rent seeking, currency substitution and speculation.
“I am very confident that Nigeria will in not too distant future appreciate a stable exchange rate and availability of forex in the local economy as the right people for government policies’ implementation get such responsibility,” he stated.
