ABCON advocates measures to curb naira depreciation

The Association of Bureaux De Change Operators of Nigeria (ABCON) has advocated measures to curb the continued depreciation of the naira.

The measures are contained in the ABCON Quarterly Economic Review for the third quarter of the year (Q3’21).

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ABCON noted that recent developments in the foreign exchange market ha proven that the suspension of dollar sales to BDCs was not the solution to the continued depreciation of the naira in the parallel market.

To address the continued depreciation of the naira in the parallel market, ABCON called on the Central Bank of Nigeria (CBN) to restructure the BDC sub-sector and to resume dollar sales to the public through BDCs, especially in view of the failure of the intervention through Deposit Money Banks to bridge the gap between the official and parallel market exchange rate.

According to the association: “Industrialists have reported increased scarcity of foreign exchange in the system since the stoppage of intervention to BDCs; which is an indication that irrespective of the anomaly observed in the operations of BDCs, part of the allocation to the sub sector flows into the real sector. Thus, it is logical to consider restructuring BDC operations to weed out the dysfunctional units and operators bringing out the real outfits for operational efficiency.

“The refined outfits can effectively operate on independent transparent platforms dealing in autonomous funds in the economy. They should be permitted to operate as a fully independent foreign exchange professional under the best practices in international foreign exchange operations.”

ABCON also called on the CBN to investigate the actual causes of the depreciation since July 2, when it suspended dollar sales to BDCs and why the Deposit Money Banks were unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs.

ABCON said: “Why are the Money Deposit Banks unable to bridge the gap of supplying foreign exchange to satisfy the demand earlier fulfilled by BDCs?

“What were the actual causes of the depreciation from N400 to N500 per US dollar earlier in the year 2021 if discontinuing sales to BDCs did not stop the trend? Or could the alleged sharp practices of the BDCs be responsible for the continued depreciation of naira in the parallel foreign exchange market after their suspension.

“If sharp practices of the BDCs were responsible for the poor policy performance of the apex bank, why has the market not responded to the policy since CBN discontinued sales to the sub sector?”