The Association of Bureaux De Change Operators of Nigeria says naira’s return to the path of growth is sustainable.
According to figures obtained from Aboki forex, the naira was bought and sold for 1,140/$ and 1,150/$; It had earlier traded at 1,310/$ on Tuesday at the parallel market.
The President, ABCON, Dr Aminu Gwadabe, in an interview said the fall recently experienced was due to loss of confidence in the local currency among other challenges.
He stated, “The rebound of the naira has shown that there is no empirical evidence to back up its recent mindless depreciation. The depreciation is out of speculation, currency substitution and loss of confidence.
“I therefore congratulate the authorities on their abilities to induce confidence in the market. It is also important to note that the naira is just trying to discover its place as it is difficult to control price mechanism by feat in a competitive and liberalised market, but the interplay of demand and supply in the market.
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“I personally see the rebound trajectory to be sustained in the market despite the resistance of the speculators that are recording huge losses from the development as both the fiscal and monetary policies have continued to renew hope of huge liquidity injection from the proceeds of NLNG dividends and access to bilateral financial assistance.”
Gwadabe said the removal of capital control on the 43 banned items which aligned with article 8 of the International Monetary Fund would enable the policy makers to have the listening ears of Brenton woods institution for further engagements.
While this positive impact might be in the short run and to ensure continuity, he said, “There is the need to implement the democratisation and centralisation of the foreign exchange market and leverage on the BDCs moderating and correcting roles of the foreign exchange market.
“The inclusion of the BDCs in the new foreign exchange reforms remains the biggest miracle that will happen to fight speculation, hoarding and currency substitution of our local currency.”
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According to him, the BDCs, through their digitisation, could play significant roles in achieving the apex bank demand measures, more especially on transaction monitoring mechanism, genuine utilisation of available and allowable dollar sources for their operations.
An economist and Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, attributed the naira appreciation to the Supreme Court judgment that brought finality to the litigation around the presidential election. He said the judgment removed uncertainty in the economy.
He stated, “Maybe the confidence level among economic players is improving. You know we had the Supreme Court judgment which has put an end to the unrest and all disputes around the elections. That has removed some level of uncertainty from the economy.
“The pronouncement that the President made about efforts to boost the liquidity in the forex market may have also affected the level of confidence and influenced expectations because if people have expectations that liquidity will improve and the naira will appreciate, they would quickly begin to offload the dollars they have at a lower rate.
“The consequence is that this is positive for the economy. If the trend continues, that means it will have a positive influence on inflation and the prices of goods. That is if we can sustain the trend.”