The Association of Bureaux De Change Operators of Nigeria (ABCON) has urged the Central Bank of Nigeria (CBN) to discard the official exchange rate and float the Naira amid the increasingly widening gap between the official market and black market rates in the forex market.
The President of the association, Alhaji Aminu Gwadabe, was quoted by the News Agency of Nigeria (NAN) as urging the apex bank to discontinue the official exchange rate regime and undertake a sustained injection of the dollar in the market to reverse the rapid depreciation of the Naira at the parallel market.
He canvassed: “It might sound counterintuitive but the way out of the current frenzy is to abolish the official fixed exchange rate and allow the Naira to float. CBN should contemporaneously undertake a large-scale dollar intervention in the open market that can inspire confidence in the Naira and checkmate the current tailspin.
“Once there is a significant positive movement, the market will react and, in all probability, spur an avalanche of panic selling and further buoy the Naira”, Gwadabe added.
According to the forex dealer, the CBN could gradually buy back the dollars used in its intervention from the open market at a lower exchange rate for a reasonable profit.
This is even as he maintained that the next step for the regulatory monetary institution would be to strengthen the Naira in the medium to long term, adding that fiscal and monetary policies should be aligned to stimulate the tradable sector.
Gwadabe who noted that Ghana’s annual non-oil export stood at $13.1 billion while Nigeria’s was a mere $1.3 billion, said Nigeria had a long way to go in boosting its non-oil exports and by implication, foreign reserves and Naira exchange rate.
The ABCON president pointed out that all the indices suggested that the Naira exchange rate would continue to depreciate because the current monetary and fiscal authorities will continue to tether in the zone of docility.
It would be recalled that the Naira exchanged on Friday at N429.00/$1 from N426.2/$ of the preceding day’s trading session at the official market, while the exchange rate at the black market stood at N720/$.
