Market News

Bureau De Change (BDC) operators have disclosed that despite the naira’s recent appreciation in the foreign exchange market, confidence in the local currency remains weak.

While the naira’s gains against foreign currencies are seen as positive, traders argue that it continues to be weighed down by devaluation at the official market and depreciation in the open market.

The President of the Association of Bureau De Change Operators of Nigeria (ABCON), Aminu Gwadebe, attributed the naira’s appreciation to the Central Bank of Nigeria’s (CBN) intervention at the Electronic Foreign Exchange Matching System (EFEMS) window.

He noted that increased forex supply and weaker demand in the market have contributed to the local currency’s improved performance.

Despite this, ABCON has warned that the naira remains highly unpredictable, facing challenges such as trade and speculative attacks, global economic uncertainty, regulatory changes, and market volatility.

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Gwadebe highlighted that economic slowdowns in major economies like the United States, Europe, and China have led to reduced trade volumes, increased volatility, and diminished liquidity.

He also pointed out that the recapitalisation policy for BDCs has increased compliance costs and affected market stability.

To sustain the naira’s positive trajectory, Gwadebe urged the CBN to adopt a forward communication strategy that emphasises positive developments while minimising the impact of negative news. He stressed the need for the CBN to extend its interventions beyond the wholesale banking sector to include BDCs, ensuring increased liquidity at the retail end of the market.

He noted that although the naira appreciated from a low of N1,580 per dollar to N1,545 per dollar within the week, the currency continues to suffer from low confidence, with market players hesitant to offload their forex holdings.

BDC operators have also linked recent naira depreciation to increased demand for forex driven by government contractual payments and financial releases.

Gwadebe warned that the forex market is facing heightened attacks and stressed the importance of regulatory consistency in managing reforms and policies to stabilise the volatile exchange rate.

He called on the CBN to revisit its policy on International Money Transfer Operators (IMTOs), ensuring a portion of their forex proceeds is directed to BDCs to enhance liquidity.

The CBN has introduced several measures to address forex market volatility, but experts believe sustained intervention and strategic policy implementation will be crucial in restoring long-term confidence in the naira.