The Association of Bureau De Change Operators of Nigeria (ABCON) has strongly warned foreign exchange speculators, who have been pushing for the forceful depreciation of the naira through their illegal activities, that they run the risk of losing their money.
According to a report from ThisDay, this is contained in a statement issued by ABCON on Sunday, November 22, 2020, and titled, “ABCON warns speculators will lose money as CBN has enough reserves to fund market, defend naira“.
The President of ABCON, Alhaji Aminu Gwadabe, said foreign exchange speculators run the risk of losing their funds, as the Central Bank of Nigeria (CBN) has enough in its reserve to defend the naira and close the widening gap between official and parallel market rates.
The demand pressure on the naira from importers and currency speculators has seen the local currency depreciate to N484 to a dollar in the parallel market, otherwise known as the black market as at last week Friday, whereas the official CBN rate still remained stable at N379 to a dollar.
Gwadabe, pointed out that with almost $36 billion in foreign reserves, the CBN has what it takes to punish the enemies of the economy, who are forcing the naira to depreciate through speculative activities.
He said the CBN Governor, Godwin Emefiele, has continued to take the right steps and measures to stabilize the exchange rate and ensure that foreign exchange is made available to manufacturers and end users, who need the funds for their medical trips, school fees payment, travel allowances, amongst others.
He also acknowledged that the allocation of dollars to Bureau De Change operators (BDCs) has also helped to deepen the forex market and reduce the level of forex scarcity that usually encouraged speculative activities.
He pointed out that the gap between the official rate and the black market will soon be narrowed down to the barest minimum, with the CBN having the needed financial strength to fund the forex market.
Gwadebe said, “I think that the CBN by pushing the official foreign exchange rate from N306 to N379 to the dollar is in line with market demand. It has also helped to narrow the official-parallel market rates gap that formed the basis of ridiculous speculations among unpatriotic forex dealers and spectators.’’
Gwadabe advised the FG to enhance security surveillance at the nation’s borders to checkmate illegal foreign currency cash transactions.
He further called for BDC operators’ liquidity ratios to be raised to discourage dollar holdings. He said ABCON Executives will from this week begin enforcement of regulatory compliance of its members in BDC design market, saying it was helping to overheat that market.
Gwadabe disclosed that ABCON Executive Council under his leadership will continue to promote transparency and efficient market dealings, while commending the CBN Management for its progressive policies towards a stable exchange rate that aligns with its mandate of exchange rate stability.
What you should know
It can be recalled that despite the intervention of the CBN with the allocation of forex to BDCs and formulation of policies to help conserve forex and increase the dollar inflow into the country, the exchange rate disparity appears to widen further.