The Association of Bureaux De Change Operators of Nigeria (ABCON) has called on the Central Bank of Nigeria (CBN) to consider raising the liquidity ratio of banks, to discourage foreign currency holding.
According to the Association, this would increase the availability of forex especially for the purpose of increasing liquidity at the official retail segment where BDCs operate.
In its Quarterly Economic Review report for the Third Quarter of the year (Q3’2020), the Association warned CBN against pegging interest rates and other variables, saying it could lead to a faulty system.
The Association charged the monetary authority to intervene in selected priority sectors through incentives, saying it would aid the smooth flow of the whole economy, especially when complemented with fiscal management efforts.
Stressing the need for CBN to address the huge exchange rate mismatch in the forex market, ABCON said: “It is imperative for the monetary authority to actively participate with precision through market level interventions.
Volumetric interventions and demand push exchange rates must automatically influence the market in the direction the authority desires.
“It is illogical to intervene in the market at N380 when the open market is moving at N460. Who takes the margin? This is an exchange rate mismatch.
“The solution to the problem is not throwing millstones or blackmailing any sub-sector of the market, the margin ends in one market, and is functional to the volume to satisfy market deficit in supply.”
It called for increased cooperation among BDC operators to attract autonomous foreign exchange inflows, facilitated by the reopening of the economy.
“Operators are set to make windfalls as foreign currency arrears coming from the long business lockdown are reopening. Traders, through cooperation, can attract huge autonomous foreign exchange volume through interplay of fine exchange rate margins from the liquidity in the open market,” the Association added.
The Association also warned against increasing the retirement age, saying it would work against the policies put in place to reduce youth unemployment in the country.
ABCON said its position was against the backdrop of the recent decision of the Federal Government to increase the retirement age of teachers from 60 to 65 years.
According to the report, increasing the workforce retirement age would be counterproductive under conditions of high youth unemployment rate, urging the government to instead prepare solid post-retirement facilities and promote policies to reduce youth unemployment with a view to addressing social unrest.
It maintained that recovery from the severe impact of the COVID-19 pandemic on the nation’s economy would be determined by a structured and people-oriented policy, aimed at resolving the macroeconomic imbalance arising from the disruptions.
Also, the Association said the Federal Government should put in place post-retirement facilities instead of increasing retirement age and direct spending towards business recovery, poverty alleviation and infrastructure development to align with the monetary policy trust.