The ongoing rebound of the naira against dollar and other world currencies are indications that the Central Bank of Nigeria (CBN) policies and reforms in the forex market are working, President, Association of Bureaux De Change Operators of Nigeria (ABCON), Alhaji (Dr.) Aminu Gwadabe has said.
In his comments on the current naira ascendency at both official and parallel markets, he said the naira recorded a major comeback, exchanging officially at N1,485.95/$, one of its strongest position in seven months. The naira equally rallied to N1,610 to dollar at the parallel market over the weekend.
This is as Gwadabe has called on the apex bank to review downwards, the huge capital requirement for BDCs recapitalization, saying meeting the capital base remains big challenge for majority of operators.
He also called on the CBN to grant ABCON self regulatory status to aid forward guidance of its members, and adopt the operators IT platforms to entrench a tech-driven industry and boost transparency in market operations.
He said granting self-regulatory status to ABCON will enable the group to sanction erring operators on non compliance and boost compliance to regulatory guidelines.
Gwadabe hinged the naira rally to the newly implemented Foreign Exchange (FX) Code investors confidence, investment in oil and gas output streamlining diaspora remittances aimed at enhancing market liquidity, transparency and guiding market participants in Nigeria’s foreign exchange sector, adding that meeting the needs of BDCs will further strengthen the local currency against the dollar.
The new CBN guidelines for the sector also requires all Tier-1 BDCs to raise N2 billion minimum capital to remain in business, while Tier-2 BDCs are to raise N500 million minimum capital. The Tier-1 BDCs will operate nationally, while the Tier-2 BDCs can only operate in one state within the Federation.
He backed the apex bank’s position that the FX Code is comprehensively addressing various aspects of market conduct and practice, it is not intended to be exhaustive.
He said the policy authorises the CBN to establish and enforce directives regarding the standards for financial institutions under which FX deals are to be conducted.
Gwadabe said the code will further entrench transparency and accountability in the FX market, and continually sustain naira rally.
He urged all BDCs and authorized dealers to comply with the FX code guidelines in their operation while also adopting regulatory, management , Board , and activity report for their Risk exposures on their AML/CFT manual
He also backed CBN’s position that all institutions engaged in the foreign exchange market must also provide the CBN with a detailed implementation plan outlining how they intend to achieve full compliance with the FX Code.
This plans are expected to be formally approved and signed by the institution’s board of directors, and it must be accompanied by relevant extracts from the board meeting where the plan was reviewed and endorsed.
Gwadabe reiterated CBN-licenced BDCs readiness for regulatory reforms that would reposition the operators for enhanced efficiency, transparency and compliance with set regulations in the interest of the financial system and economy.
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