The Association of Bureau De Change Operators of Nigeria (ABCON) has stated that the oversubscription of recent FGN securities is having a positive effect on the naira exchange rate to the USD.
The President of the group, Alhaji Aminu Gwadabe disclosed this in an interview with NAN where he applauded recent reforms by the CBN geared towards taming inflation and strengthening the naira.
The head of ABCON remarked that clearing the backlog of legitimate foreign exchange transactions positively impacted the forex market, improving the Naira’s prospects and enticing foreign investors.
- He stated, “We are also seeing how they are using the securities to attract foreign investments, which are oversubscribed. That is also having a lot of positive impact on the exchange rate.”
- “We have also seen how they took the bold decision to reinstate the BDCs window to deepen the market, which has broken the camel’s back,”
- “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.”
- “In summary, that is my observation: the increasing resilience, capacity, and arsenal of the Central Bank of Nigeria to defend our local currency through several measures.”
- “My advice is for them to continue widening and undergo a paradigm shift in sourcing foreign exchange for the economy,”
What you should know
Over the last month, there has been a notable increase in the demand for Nigerian Government Treasury bills and the Central Bank of Nigeria’s (CBN) Open Market Operation (OMO) bills, drawing particular interest from international investors. This surge in demand is largely due to the high interest rates these securities are yielding.
At a recent auction, the CBN sold OMO bills worth N1.06 trillion, with the interest rate peaking at an unprecedented 21.5%, and received bids totalling about N1.14 trillion. Similarly, in a Treasury bills auction held in March 2024, the CBN sold N1.3 trillion worth of T-bills at the same interest rate of 21.5%, experiencing significant oversubscription.
The Naira has experienced considerable appreciation against the US dollar in the last two weeks, underscoring the CBN’s successful measures to stabilize the fluctuating foreign exchange market.
As per Nairametrics’ daily foreign exchange monitor, the exchange rate stood at N1,431 to the dollar as of Friday, March 22, 2024.