ABCON Mobilises Forex Dealers Against Hoarding

*Naira crawls back to N490/$

In an apparent response to the sustained spike in the foreign
exchange rate in the country, the Association of Bureaux de Change
Operators of Nigeria (ABCON) has begun the mobilisation of its
members to narrow the spread between spot and illegal market value
of dollars.

Consequently, the association has asked its members not to hoard
foreign currency, Aminu Gwadabe, president of the association, said
in a text message to Bloomberg. He explained that a group of
officials had been checking on compliance in cities across the
country.

Money market dealers disclosed that dealers hoarding dollars may
be barred from the central bank’s foreign-exchange auctions.

The naira, which plunged to a four-year low of N505 a dollar on
Monday, gained 0.6% to N490 yesterday in the unauthorised market,
according to abokifx.com, a website that collates the data. It
opened at N411.58 a dollar on the nafex window also used as the
official rate by the central bank.

With inflation at almost 18%, many people have been accumulating
foreign currencies to protect their wealth, often buying dollars
from illegal traders. The demand in the parallel market distorts
the exchange rate, according to the Central Bank of Nigeria, and
has prompted it to take steps to narrow the spread.

“We advise, and warn our members in particular, and the public
to desist from any behaviour of speculation and hoarding,” Gwadabe
said. Such actions “will definitely lead to a very big collateral
loss,” he said

A central bank spokesman said the lender was taking steps to
block arbitrage opportunities resulting from the gap between the
official and parallel markets.

Commercial banks executives also agreed to increase dollar
supply for end users in a meeting that held with Governor Godwin
Emefiele last week. With the arrangement, lenders can provide the
greenback at the official rate of about N410 to N412 to reduce
demand pressure on the streets.

Nigeria devalued its currency thrice since March last year as
lower oil income, which accounts for about 90% of dollar earnings,
put pressure on external reserves.

*Naira crawls back to N490/$

In an apparent response to the sustained spike in the foreign
exchange rate in the country, the Association of Bureaux de Change
Operators of Nigeria (ABCON) has begun the mobilisation of its
members to narrow the spread between spot and illegal market value
of dollars.

Consequently, the association has asked its members not to hoard
foreign currency, Aminu Gwadabe, president of the association, said
in a text message to Bloomberg. He explained that a group of
officials had been checking on compliance in cities across the
country.

Money market dealers disclosed that dealers hoarding dollars may
be barred from the central bank’s foreign-exchange auctions.

The naira, which plunged to a four-year low of N505 a dollar on
Monday, gained 0.6% to N490 yesterday in the unauthorised market,
according to abokifx.com, a website that collates the data. It
opened at N411.58 a dollar on the nafex window also used as the
official rate by the central bank.

With inflation at almost 18%, many people have been accumulating
foreign currencies to protect their wealth, often buying dollars
from illegal traders. The demand in the parallel market distorts
the exchange rate, according to the Central Bank of Nigeria, and
has prompted it to take steps to narrow the spread.

“We advise, and warn our members in particular, and the public
to desist from any behaviour of speculation and hoarding,” Gwadabe
said. Such actions “will definitely lead to a very big collateral
loss,” he said

A central bank spokesman said the lender was taking steps to
block arbitrage opportunities resulting from the gap between the
official and parallel markets.

Commercial banks executives also agreed to increase dollar
supply for end users in a meeting that held with Governor Godwin
Emefiele last week. With the arrangement, lenders can provide the
greenback at the official rate of about N410 to N412 to reduce
demand pressure on the streets.

Nigeria devalued its currency thrice since March last year as
lower oil income, which accounts for about 90% of dollar earnings,
put pressure on external reserves.