The Association of Bureau De Change Operators of Nigeria (ABCON) on Sunday anticipated that the Central Bank of Nigeria’s Monetary Policy Committee (MPC) will increase benchmark rates further to address the persistent inflation rate.
Its president, Aminu Gwadabe, made the forecast in a telephone interview in Lagos ahead of the next MPC meeting on March 25 and 26.
Mr Gwadabe commended the CBN for its recent reforms to boost the economy and its continued efforts to tame inflation.
At its last MPC meeting on February 27, the CBN raised the monetary policy rate (MPR), which benchmarks interest rates, from 18.75 per cent to 22.75 per cent.
It also increased the cash reserve ratio (CRR) from 32.5 per cent to 45 per cent while retaining the liquidity rate at 30 per cent.5
However, the headline inflation rate, which stood at 29.90 per cent in January, rose to 31.70 per cent in February.
The ABCON boss said the clearance of the valid foreign exchange backlog was a positive development in the forex market, giving the naira a positive outlook and attracting foreign investors.
“We are also seeing how they use the securities to attract foreign investments, which are oversubscribed. That also has a positive impact on the exchange rate.
“We have also seen how they boldly decided to reinstate the BDCs window to deepen the market, which has broken the camel’s back,” he said.
He underscored the importance of sustaining the current momentum in curbing naira volatility and improving economic growth.
“As we speak, as of today before the meeting, the exchange rate of the naira to the United States dollar is awesome. It’s reassuring and shows that the CBN has the muscles and arsenal to protect the value of the Naira.
“My advice is for them to continue widening and undergo a paradigm shift in sourcing foreign exchange for the economy,” he said.
Mr Gwadabe also urged the MPC to explore alternative avenues for sourcing foreign exchange, emphasising the significance of clearing valid foreign exchange backlog to enhance market stability and attract foreign investors.
He lauded the CBN’s decisive actions, citing the reinstatement of BDCs as a significant move that had positively influenced the forex market.
In light of ongoing challenges in the oil sector, Mr Gwadabe called for diversification efforts and emphasised the importance of synergy between fiscal and monetary policies.
Mr Gwadabe, therefore, urged the committee to consider proposed reforms by ABCON, including granting preferential treatment to BDCs to enhance their capacity and ensure their contributions to market stability are maximised.
(NAN)
