Partnership of CBN, ABCON stabilises naira amidst political spending

The ongoing strategic partnership between the Central Bank of Nigeria (CBN) and the Association of Bureaux De Change Operators of Nigeria (ABCON) has kept the naira stable at both the official and parallel market s despite huge campaign spending by political parties.

ABCON President, Alhaji Aminu Gwadabe who spoke with financial journalists in Lagos at the weekend, said measures initiated by the CBN including the sustenance of dollar supply to over 4,000 Bureau De Change (BDC) operators across the country through the International Money Transfer Operations (IMTOs) forex window has helped the status of the local currency.

Accordingly, the CBN, spot rate closed last week somewhat flat at N306.75/$1 from N306.70/$1 in the prior week. Similarly, the exchange rate at the Investors & Exporters Forex window closed at N364.70/$1.

At the parallel market and BDCs, the naira traded at N363/$1 throughout the week.

He said, “The naira remains stable despite political parties campaign spending across the nation. The strategic partnership, actions, and pre-actions of the Central Bank of Nigeria and the Association of Bureaux De Change Operators of Nigeria have stopped distortions to the exchange rate due to ongoing politicking and campaign spending in the country.”

Continuing, he said the determination of the apex bank to maintain the IMTOs forex window for the over 4,000 BDCs on weekly basis has brought steady liquidity in the market and discouraged unethical market behaviours like hoarding, speculation and frivolous demand.

Gwadabe said that on its part, ABCON has ensured that its members continue to make dollar accessible to critical end-users like travelers demanding personal and business travel allowances, school fees and medical bills payment abroad among others.

He said the ongoing ABCON automation and configuration of soft token for forex return rendition by over 4,000 BDCs nationwide will enhance transparency and financial integrity of the operators. “This feat will no doubt strengthen the effectiveness of the technical compliance of the Anti-money laundering and counter-terrorism financing laws and help Nigeria’s assessment into the Financial Action Task Force coming up next year,” he stated.

The ABCON boss was impressed that increased surveillance by the security agencies on illicit financial flow and controls at the nation’s borders have enhanced the stability in the market.

He said that the secondary market currently enjoys huge confidence making it difficult for foreign exchange speculators and illegal foreign exchange dealers to manipulate the market.

Gwadabe said the operations of IMTOs was part of the efforts by the apex bank to liberalise the foreign exchange market, boost liquidity and make a dollar more readily available to low-end users.

He praised the apex bank for continuously providing an enabling environment for IMTOs and BDCs which has in no small measure, deepened availability of foreign exchange at the retail end of the market.

He explained that although declining global oil prices should fundamentally led to the massive depreciation of the naira, the commitment of the CBN to the defense of the naira keeps providing stability for exchange rates at different segments of the foreign exchange market.

Gwadabe said the coming of Investors and Exporters (I&E) Forex Window, was also part of CBN’s efforts to further develop the Nigerian foreign exchange market and improve market structure.

On regulatory compliance, Gwadabe said the licensed BDCs are committed to naira’s stability at both official and parallel markets and have consistently partnered with the CBN to achieve this objective.

“The CBN-licensed BDCs have always played collaborative and positive roles for the regulator in achieving exchange rate stability. Besides, CBN’s admission of licensed BDCs into the International Money Transfer Operators- IMTOs-Window has continued to keep the naira stable”, he stated.

“ABCON has continuously assured the CBN and taken appropriate measures to ensure that purchased funds are disbursed to end users and for eligible transactions only. We also render weekly returns on purchases from the banks to the Trade and Exchange Department of the apex bank. We also ensure strict compliance with the provisions of the anti-money laundering laws observance of appropriate Know-Your-Customer principles in the handling of foreign exchange transactions,” he said.

The ABCON chief reiterated the need for the foreign exchange users to deal with CBN-licensed BDCs only and urged the public to report errant operators for necessary sanction.