The Association of Bureau De Change Operators of Nigeria (ABCON) has launched a Uniform Weekly Exchange Rate for Licensed Bureaux De Change portal with operations expected to take off today. According to the Association’s President, Alhaji Aminu Gwadabe, who launched the portal at the maiden Business Editors of Print, Electronic Media and Wire Services, in Lagos, reiterated that the move would bring about exchange rate convergence, eradicate currency speculation and ensure speedy recovery for the naira against the dollar.
What though , do stakeholders feel about this move by the ABCON? These reactions explain how professionals feel the introduction of this new exchange rate eeill play out in the market.
Former Executive Director, Keystone Bank, Richard Obire, believes that ABCON’s initiative to seek a unified rate among themselves will bring sanity to the forex market.
“I do not know how the group wants to achieve this, but if well implemented, it will bring orderliness to the market. It is easier to achieve such feats- Personal Travel Allowance and Business Travel Allowance transactions. It is really a good initiative that will reduce the level of uncertainty in the market,”
The Associate-Research, Eczellon Capital Limited, Mustapha Suberu, said there was need to allow a transparent price discovery in the market, which he believed would stimulate dollar inflows into the economy and subsequently, lead to local currency stability. He solicited a well thought-out plan that would impact the forex market activities and allow foreign investors to develop confidence in the economy, and bring about positive market-determined rate.
Managing Director, Afrinvest West Africa, Ike Chioke, believes the incorporation of a long-term diversified strategy in fiscal policy is required to cushion shocks in various segments of the economy and revive the naira.
“To reduce this pressure, an inward looking policy (tax incentives, infrastructure development and production subsidy) should be emphasised to reduce the dependence on imported goods”
Economist and former acting Managing Director, Unity Bank Plc, Dr. Muhammad Rislanudeen, described the collaboration between BDCs and the CBN as crucial bringing stability to the naira but not enough to put a peg on FX in the long run.
“It is a good proactive move by CBN to have stakeholder engagement in finding solution to the volatility in the foreign exchange market. However we can only have stable, predictable exchange rate if there is market stability, where market determine rates. Naira is certainly undervalued in the BDC market even as it is overvalued in the official market where the foreign currency is scarce.”
These views show that while the idea of regulating the unofficial exchange rate might curb the excesses of rumor-mongers that undervalue the Naira, the move might eventually result in Nigeria having 3 different exchange rates instead of the 2 it currently has. Of course, this will do nothing to boost the confidence of foreign investors. As advised it would be necessary to adopt more measures aimed at ensuring that the Naira’s real vlue is traded officially, and parallel market loses its appeal.