The trade war between the United States of America (US) and China have led to higher crude oil (Brent) prices, which is good for the naira and Nigerian economy, President, Association of Bureaux De Change Operators of Nigeria (ABCON) , Alhaji Aminu Gwadabe has said.
Speaking yesterday to financial journalists in Lagos, the ABCON Chief said that since the beginning of April this year, oil prices have remained above $70/barrel as the trade war rages. He said the US sanctions on Iran and Venezuela have 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 $200 billion worth of Chinese imports to 25 per cent from previous rate of 10 per cent, pushing prices of affected consumer goods higher.
“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 next level of stability . I advise the Federal Government and the Central Bank of Nigeria (CBN) Management to take advantage of the two crises- trade tensions and rise in crude oil prices by introducing that will support growth and development opportunities,” he said.
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 are already utilizing their Yuan Swap agreement with China to strengthen their local currency, a strategy Nigeria is also expected to pursue.
The ABCON boss expects the CBN management to deepen currency SWAP pact with China and diversify commodity exports to the United States in other to diversify foreign exchange earrings 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 is 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.
Gwadabe said the CBN has been able to create a people-focused Central Bank promoting macro-economic objectives such as low inflation and a stable exchange rate, along with a focus on promoting inclusive growth and reducing unemployment in the country.
He added that the apex bank has also increased its lending to the agricultural and manufacturing sectors, through targeted intervention schemes such as the Anchor Borrowers Program, Commercial Agricultural Credit Scheme and the Real Sector Support Facility.