How Naira Can Return to Below N1,000 Per Dollar Mark – Insights from BDCs President, Dr. Aminu Gwadabe

In an exclusive interview with Daily Post correspondent Ariemu Ogaga, Dr. Aminu Gwadabe, National President of the Association of Bureaux De Change of Nigeria (ABCON), shared his insights on the recent depreciation of the Naira and outlined strategies to stabilize Nigeria’s foreign exchange market. Dr. Gwadabe highlighted the reasons behind the Naira’s recent decline and proposed solutions to bring the exchange rate below the N1,000 per dollar mark. Here’s what he had to say:

Root Causes of Naira Depreciation

The recent weakening of the Naira in the foreign exchange market has caused concern among investors and the general public. Dr. Gwadabe identified several factors contributing to this downward trend, including:

• Speculation and Arbitrage: Some traders bought dollars from the open market and sold them at the interbank window, creating a significant demand for dollars and driving down the Naira’s value.
• Unregulated Online Platforms: Online platforms that trade the Naira with little oversight contributed to its depreciation.
• Speculators’ Manipulation: Speculators, seeking to recover lost gains from Naira depreciation, continued to hold their positions, leading to further pressure on the currency.

Intervention from the Central Bank

In response to the currency’s depreciation, the Central Bank of Nigeria (CBN) released an intervention of $10,000 to eligible BDCs at N1,021 per dollar. Despite this move, the Naira failed to drop below N1,300 per dollar in the parallel market. Dr. Gwadabe attributed this to a liquidity shortage in the retail end market, where volatility is most pronounced.

The Role of Bureaux De Change (BDCs)

Dr. Gwadabe emphasized that the BDC sub-sector is crucial in the CBN’s efforts to stabilize the foreign exchange market. He noted that suspending BDC operations in July 2021 contributed to market volatility and that the renewed collaboration between the CBN and BDCs has brought about exchange rate unification and a slight appreciation of the Naira.

Plans to Harmonize the Retail FX Market

ABCON recently announced plans to harmonize the retail section of the foreign exchange market to tackle Naira depreciation. Dr. Gwadabe explained that this initiative would involve democratizing, centralizing, and digitizing the retail end market. The unified digital platform will help ensure price discovery, autonomy, and compliance with anti-money laundering and counter-terrorism financing regulations.

Cardoso’s Leadership at the Central Bank

When asked about the new CBN governor, Olayemi Cardoso, Dr. Gwadabe praised his leadership and stakeholder engagement. He noted that the new administration inherited a challenging situation but has taken decisive steps to reform the market.

Short-Term and Long-Term Solutions for Naira Stability

Dr. Gwadabe suggested that in the short term, fiscal and monetary authorities should continue to deepen linkages and harmonization to combat volatility. He also recommended an amnesty program to encourage citizens to bring their dollar holdings into official accounts and the issuance of diaspora remittance bonds.

For long-term stability, Dr. Gwadabe emphasized the need to boost Nigeria’s oil production capacity, incentivize non-oil exports, and empower youth through skill development and job creation. He called for a change in mindset among Nigerians to support the Naira and avoid currency substitution, hoarding, speculation, and round-tripping.

Final Words of Encouragement

Amid the ongoing depreciation and rising inflation, Dr. Gwadabe urged Nigerians to remain hopeful and work together to restore the Naira’s strength. He assured that the CBN and the government are taking steps to inject liquidity into the economy and stabilize the Naira in the long term.