The House of Representatives has urged the Central Bank Of Nigeria (CBN) to urgently put in place a policy to check further devaluation of the Naira to the Dollar and other international legal tenders.
The resolution followed a unanimous adoption of a motion moved by Rep. Salam Bamidele at plenary on Wednesday.
Bamidele recalled that in February 2021, the Governor of the CBN, while addressing the Bankers Committee at a summit on the economy in Lagos, informed the committee about the Naira devaluation against the USD.
Bamidele said that the CBN governor had disclosed that the official exchange rate stands at 410 to the dollar.
According to the lawmaker, that is 7.6 per cent weaker than the rate of 379 published on the central bank’s website.
He said that while the value of the naira relative to the dollar has declined by 9 per cent in the last six months, the South African Rand and Ghanaian Cedi, have appreciated by 11.4 per cent and 1 per cent respectively.
“The CBN has adopted multiple exchange rates since last year in a bid to avoid an outright devaluation .
“ The official rate used as a basis for budget preparation and other official transactions differs from a closely controlled exchange rate for investors and exporters known as the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology (Nafex).
“The Naira has traded in a tight range between 400 naira to 410 naira. The Nafex rate is different from the parallel market, considered illegal by the CBN, where the Naira closed at 502.
“Some experts believed that Nigeria devalued the Naira to record low against the dollar on the official market; according to some traders, their strategy is to unify multiple exchange rates to boost the dollar supply through direct interventions.
“Having traded within a band of 380 and 381 to the dollar since July last year, the Naira hit a record low of 419.75 against the dollar and closed at 411.25 the previous closing rate for the Naira on the over-the-counter spot market,” he said.
The Rep said that the devaluation was likely to cause inflation because imports will be more expensive as any imported good or raw material will increase in price.
He said that devaluation of the Naira makes it more difficult for Nigerian youths especially those in the IT sector whose businesses are online and must necessarily transact businesses in dollars.
Bamidele said that an enormous and rapid devaluation may scare off international investors and could trigger capital flight.
The lawmaker stated that, if consumers have debts, like mortgages in foreign currency, they will see a sharp rise in the cost of their debt repayments after a devaluation.
The Speaker of the House, Femi Gbajabiamila thereafter, mandated the Committee on Banking and Currency to ensure compliance.
He directed the committee to report back to the House in two weeks for further legislative action.
