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The naira yesterday rebounded to N770/$1 at the parallel market after President Bola Ahmed Tinubu directed the Central Bank of Nigeria (CBN) to unify multiple exchange rates in the market.
As the market digested the directive, the local currency, which traded at N780/$1 at the parallel market on Monday, gained N10/$1 as market forces began to interrogate the implications of exchange rates harmonisation.
The CBN operates a multiple exchange rates regime with different rates adopted by different segments of the economy. The Nigerian Autonomous Foreign Exchange Rate Fixing (NAFEX) also called I&E forex window, parallel market rate, International Air Transport Association (IATA) rate, Interbank Exchange Rate and Bureaux De Change (BDC) rate are few examples.
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President Tinubu had during his inaugural speech on Monday, said the monetary policy needs thorough housecleaning and directed the CBN to work towards a unified exchange rate.
This, he said, will direct funds away from arbitrage into meaningful investment in the plant, equipment and jobs that power the real economy.
Market findings showed that currency dealers in Abuja Zone 4 market, bought dollars at N765/$1 and sold at N770/$1, as against N780/$1 it traded at the parallel market on Monday.
The Euro traded at N818 buying rate and N805 selling rate while the British Pounds Sterling exchanged at N955 buying rate and N937 selling rate.
President, Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, said a volatile naira has underpinned the slow economic growth recorded by Nigeria in the last many years.
He said the over 50 per cent margin between the formal and informal market has continued to aid hoarding, currency substitution, round tripping, policy inconsistencies and loss of investors’ confidence.
In repositioning the naira for growth in the midst of dwindling buffers and narrowing supplies sides, he advocated for harmonisation of multiple exchange rate to achieve exchange rate stability.
“ABCON as a group and as the potent transmission mechanism of forex liquidity in the retail market and sustained stability, aligns with incoming Government position of harmonizing multiple exchange rates and discovery of a true market price for the naira,” he said.
Gwadabe also called for reforms to break the monopoly in forex market and engender competition, transparency and accountability.
“The incoming Government should ensure there is a paradigm shift from demand measures to supply measures through securitization of Diaspora remittances like is being done in other climes to inject the needed foreign exchange liquidity in the economy and enhance internally generated revenue. The incoming Government should leverage on the bureaux de change sub sector to achieve this laudable objectives,” he stated.
