The reasons behind the Naira’s strengthening versus the dollar have been disclosed by the Association of Bureau De Change Operators of Nigeria (ABCON).
Its President, Aminu Gwadabe, stated in a statement on Sunday in Lagos that “the development stems from the ‘double-edged sword dollar liquidity injection and the mopping up of the naira through interest rate hikes.”
The market’s current state and the naira’s ongoing gains are the result of the CBN’s two-pronged strategy of injecting dollar liquidity and using interest rate hikes to mop up naira.
As there is more danger involved in speculating, hoarding, and exchanging naira for foreign currencies, Gwadabe declared, “It is a good development.”
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The head of ABCON, however, stated that investors are typically more concerned with the sustainability of the accomplishments to date and that panic selling is preferable to panic buying.
In order to design a course for naira stability at the FX market, Gwadabe asked the CBN management to keep providing clarifications and putting some of the association’s proposals into practise.
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He stated that one of the suggestions is to include BDCs in the foreign exchange market because of their vital roles in satisfying the demands of the retail end sector.
According to Gwadabe, “the BDCs are necessary in the apex bank’s demand measures, transaction monitoring mechanism, and clients’ utilisation with correcting and moderating potentials.”
The country’s reserves are growing, according to the financial expert, as a result of rising demand for crude oil, its main export good.
He clarified, “This is mostly because of the United States’ rising stockpiles and the escalation of tension in the Middle East.”
Attacking the Naira should be done with prudence as we watch developments closely since it looks like the CBN is willing to maintain the gains that have already been seen in the market, according to Gwadabe.
