US, China Trade War Good For Naira Stability, ABCON Says
The trade war between the United States of America and China have led to higher crude oil (Brent) prices, which is good for the naira and Nigerian economy, the President, Association of Bureaux De Change Operators of Nigeria, Alhaji Aminu Gwadabe, has said.
The ABCON Chief said that since the beginning of April 2019, oil prices had remained above $70/barrel as the trade war raged.
He said the US sanctions on Iran and Venezuela had tightened the supply of crude oil to the market and put upward pressure on oil prices.
Gwadabe disclosed that Washington had last week, raised tariffs on $200bn worth of Chinese imports to 25 per cent from previous rate of 10 per cent, pushing prices of affected consumer goods higher.
He stated, “The rising oil prices as a result of tension in the Persian Gulf and the increasing trade wars between two world economic giants, China and America will help to take the naira to another level of stability.
“I advise the Federal Government and the Central Bank of Nigeria’s management to take advantage of the two crises – trade tensions and rise in crude oil prices by introducing policy that will support growth and development opportunities.”
Gwadabe said that with the exchange rate stability being witnessed in the market, the next target of the apex bank should be to have a single digit interest rate that would stimulate economic activities and business growth.
He said that Russia and the Asian countries were already utilising their Yuan Swap agreement with China to strengthen their local currency, a strategy Nigeria was also expected to pursue.
The ABCON boss expected the CBN management to deepen currency SWAP pact with China and diversify commodity exports to the United States in other to diversify foreign exchange earnings for the country.
“Other great areas to focus for diversifying our foreign exchange earnings include promoting Diaspora Remittances for economic buffer and foreign reserves accretion as seen in India and United Arab Emirates where migration remittances have lifted their economies,” he said.
He said that effort should also be intensified by fiscal authorities in empowering the youths through job creation and higher productivity.
“The ABCON Executive Council under my leadership will continue to promote improved capacity and technological advancement among BDC operators. We are also committed to better skills acquisition for BDC operators to elevate them to viable monetary regulatory partners and lead player in exchange rate stability,” he said.
He commended the CBN management for promoting a sustainable exchange rate stability policy “that is in consonance with its price stability mandate.”
He said there was always an option for the CBN to either abandon the exchange rate stability mandate to accumulate foreign reserve and allow the naira to depreciate as was the case when the local currency dropped to N530 to dollar nearly two years ago, thus adversely affecting businesses.