The Naira Tuesday appreciated further to N345 per dollar in the parallel market. Meanwhile bureaux de change (BDC) operators have voiced their support for the federal government’s position against further devaluation of the naira.
Investigation reveals that the parallel market exchange rate, which had been on the downward trend since last week, fell further to N345 per dollar at the close of business yesterday from N375 on Monday.
BDC operators said attributed the continued appreciation to increased supply and sharp decline in demand for foreign exchange. “People are coming to the market to sell but there is no demand”, said Taiwo Ebenezer, South West Zonal Chairman, and Association of Bureaux De Change Operators of Nigeria (ABCON).
Speaking at a press conference Tuesday, ABCON President, Alhaji Aminu Gwadabe, dissociated BDC from the rapid depreciation of the naira from N265 to N400 in the parallel market saying such developments is not good for the business of BDC.
He said, “Depreciation of the naira affects the working capital of BDCs and by extension their turnover. BDCs are able to do more business when the exchange rate is stable and relatively close to the official exchange rate.
Hence, BDCs cannot promote what is injurious to their business.
Secondly, BDCs are basically intermediaries. They buy dollars from the public and sell to the public. Our incomes come from the margin between the selling rate and buying rate.
To this end BDCs are more interested in turnover than in the exchange rate. We make money from the rate at which we can use our working capital to buy and sell dollars. We make money from the rate at which we can use our working capital to buy and sell dollars.
Hence BDCs don’t determine the exchange rate; this is determined by the demand and supply for dollars in the market. With the intense scarcity of dollar in the market, and increased demand, the foreign exchange market has become a sellers’ market.
The rate is largely determined by the sellers, and not by BDCs who are mere intermediaries. “ Gwadabe said that is why the ABCON supports the position of the federal government that there would be no further devaluation of the naira.
He said, “ABCON hereby aligns itself with the stance of the President that there would be no further devaluation of the naira. “While it is true that the country is experiencing shortage of foreign exchange inflows due to decline in crude oil price, fall in external reserve, which makes it difficult to accommodate all demand for foreign exchange, the reality is that devaluation of the naira will not solve the problem.
What we need are policies that will diversify our economy to increase non-oil export earnings, and reduce importation, leading to increased foreign exchange inflow and reduction in demand for foreign exchange.
Like the President indicated recently, since the only significant thing we export is crude oil, devaluation will do more harm to the economy than good. So we also say no to further devaluation of the naira.”