Hoarding of dollars fuelling naira depreciation –ABCON

Bureau De Change operators have raised the alarm that due to the depreciation in the value of the naira, some Nigerians are keeping their savings in the United States dollar.

National President, Association of Bureau De Change Operators of Nigeria, Aminu Gwadabe, stated that there was a need for the forex market to be liquid.

Gwadabe noted that the $2.2bn released by the African Import-Export Bank was not enough to stimulate the market.

“For now, it’s a difficult situation which is also creating panic in the market because the value of the naira is eroding and because of that, a lot of people prefer to keep their savings in dollars,” he disclosed.

Speaking on the $2.2bn facility, Gwadabe said, “The $2.2bn Afrexim bank crude prepayment facility is a welcome development but I don’t think it’s enough to stimulate the market considering the situation because if we put $2.2bn into the market, we have been seeing demand in the I&E window alone ranging from $150m to $250m daily so, in 10 days, the $2.2billion will be exhausted. Speculators will speculate and we will run it out between 10 to 15 days.”

He, however, called for a paradigm shift in the supply of dollars into the FX market, He said, “we need to have a paradigm shift in terms of supply, it’s very important and should be immediate. We have been talking about diaspora remittances and as of last year, we recorded over $ 20bn US dollars.

“The market is willing buyers and sellers but, we need to separate operation and ownership because if we say an IMSO should be the one to initiate and terminate a transaction then hope for transparency in the transaction will be defeated.

“We, hereby, advise that the CBN review their 2020 circular whereby they have agreed or stated that the BDC should be an agent of the International Money Transfer Transaction so that we can now separate operation and ownership and with that, it won’t be the person that initiates the fund as the owner will be the one terminating the fund to the ultimate beneficiary.”

A financial analysts, said Nigerians were buying and keeping foreign exchange to meet future financial obligations.

He said, “ It’s a no-brainer, let’s think about it, if you look at the trend of the naira this year alone, there will be devaluation and if we look at the level of devaluation so far and people who have dollar needs in the next couple of months or years for instance may be buying and keeping it.

For instance, anyone going on vacation in August will be very profitable for the person to borrow money now, he will be buying dollars and holding it and will be paying interest on it. I am telling you the thinking of Nigeria.

“I even know someone that his child will be going to University abroad in the next 5 years and the person is buying dollars as he’s getting the money little by little for the obligations he wants to meet in the future,”  Olubunmi stated.