Naira Firmed On Tuesday, Traded At 340 Against The Dollar

The naira firmed again yesterday to trade at N340 against the US dollar at the parallel market from N370 on Monday, but traders differ on reasons for the appreciation. The official market rate remained at N197, with President Muhammadu Buhari’s insistence that the currency would not be devalued. Bureau de Change (BDC) operators gave varying reasons for the appreciation of the naira.

A BDC agent, who asked not to be named, said the N35 million deposited by BDCs to the central bank of Nigeria (CBN) has been refunded, easing capital tension in the market.

“We have collected our N35 million, so we have more money to do business with. We can approach some of our sources with money to get dollars,” he said. However, Musa Tairu, another BDC agent, differed in opinion, saying the appreciation of the naira was due to a drop in demand for dollars by most “big companies”.

Meanwhile, the Association of Bureau de Change Operators of Nigeria (ABCON) have said they stand behind the resolve of the president and the Central Bank of Nigeria in the fight against devaluation.

The money changers also debunked reports that they are behind the depreciation of the naira at the parallel market saying that it is far from the truth.

Speaking at a press conference in Lagos yesterday, the acting President of the association, Aminu Gwadabe noted that an environment of uncertainty, unstable and sharp depreciation of the naira is bad for BDC business.

“Depreciation of the naira affects the working capital of BDCs and by extension their turnover. BDCs are able to do more business when the exchange rate is stable and relatively close to the official exchange rate. Hence, BDCs cannot promote what is injurious to their business.

Stating that ABCON had always kicked against devaluation of the naira “because we believe it creates more problem than it solves” he said decline in crude oil price, fall in external reserve, which makes it difficult for the country to meet its foreign exchange demands.

“The reality is that devaluation of the naira will not solve the problem. What we need are policies that will diversify our economy to increase non-oil export earnings, and reduce importation, leading to increased foreign exchange inflow and reduction in demand for foreign exchange” he stated.

Gwadabe also noted that the association is working with the CBN on transforming the money changing business in Nigeria such that it will facilitate the inflow of foreign exchange to meet demand.

According to him, the BDCs website and platform will be upgraded to make them serve as agents to Western Union, currency auctioneers. We would also develop platforms that will allow our members to access sources of autonomous foreign exchange like government agencies, embassies, international oil companies, export proceeds amongst others.