Obinna Chima
The Association of Bureau De Change Operators of Nigeria (ABCON) has predicted that the naira exchange rate would appreciate after the ongoing redesigning of some dominations of the nation’s currency.
President of ABCON, Mr. Aminu Gwadabe, made the prediction in a note on his Whatsapp status yesterday, saying the Central Bank of Nigeria (CBN) was likely, “to close the gap between the flexible versus fixed exchange rate to flood the market with capital inflows.”
Gwadabe, who stressed that his outlook for naira in 2023, was that the naira redesign measure would help the CBN to mop up significant proportions of the naira outside the banking vault which hitherto was, “putting pressure on the fragile exchange rate volatility in the parallel market as the demand surge witnessed only spurious and began to thin out gradually.”
He added: “With this scenario and the expectations of the central bank to reduce the gap between the fixed and the parallel market to encourage the critical foreign inflows as a significant liquidity sources to strengthen naira.
“The envisaged liquidity will flood the market like we witnessed in 2016 when they established the I&E window to attract foreign inflows in the market for investment into our vast natural resources.
“It is important for the central bank to continue their doggedness and proactive ness to deepen distribution channels especially in the critical retail end sector as the liquidity improves by leveraging on the transmissions mechanism role of the BDCs for exchange rate stability and growth of the economy.
“Also, the increasing use of intelligence by the security agencies in tracking source and destinations of financial transactions have made currency substitutions and speculation increasingly difficult.”
The Senate last week resolved to provide legislative support to the CBN on the plan to redesign of the N1,000, N500 and N200 naira notes.
CBN Governor, Mr. Godwin Emefiele, had on October 26, announced a redesign of the currency in the variation of N200, N500 and N1,000. The CBN governor, who pointed out that the change was sequel to the approval of the president, had said circulation of the new banknotes would commence on December 15, 2022.
Emefiele had said there was significant hoarding of naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation was outside the vaults of the commercial banks. He said as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable.
Emefiele had explained that the new and existing notes would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.
He had said all banks currently holding the existing denominations of the currency might begin to return the notes to the CBN immediately, adding that the newly designed currency would be released to the banks on a first come, first served basis.
