The House of Representatives has turned down a motion urging the Federal Government to intervene and take necessary steps to stabilize the Naira.
This decision by the lower house followed a motion raised by Honourable Beni Lar concerning the government’s exchange rate unification policy.
The Central Bank of Nigeria (CBN) had earlier announced the unification of all segments of Nigeria’s foreign exchange market, consolidating all windows into one.
Concerns
Honourable Lar noted that the importation of vehicles and other commodities has significantly decreased since the floating of the Naira with the single exchange rate.
She expressed her concerns about the impact of the unified exchange rates on Nigerian students studying abroad, noting that with the devaluation of the Naira, these students have faced a drastic increase in tuition fees, with some experiencing an increment of over 60%.
She pointed out that this development had made the funds in their bank accounts become insufficient to cover their school fees.
Honourable Lar also warned about the potential consequences of the current economic situation. She cautioned that it might trigger an inflationary spiral, which could plunge Nigeria into an economic recession and depression.
House rejects motion
The motion sparked a heated debate among lawmakers, with some legislatures supporting the call for intervention in the currency situation, while others opposed the motion with the argument that it was premature to hold the Tinubu administration responsible for the exchange rate.
When the matter was finally put to a vote, the deputy speaker ruled in favour of the opposing side, effectively rejecting the motion. They held that market forces are key determinants
What you should know
Recall that on June 14, 2023, the CBN announced the unification of all segments of Nigeria’s foreign exchange market, consolidating all windows into one.
This action was part of a series of immediate changes aimed at improving liquidity and stability in the Nigerian Foreign Exchange (FX) Market.
Under this directive, commercial banks were given permission to remove the rate cap on the naira at the Investors and Exporters (I&E) window of the foreign exchange market, allowing for a free float of the naira against the dollar and other global currencies.
The CBN’s decision to float the currency and unify the country’s multiple exchange rates has been praised by the organized private sector, financial experts, and economists.
They believe this move will bring transparency and stability to the forex market, as well as attract more foreign investment and capital inflow into the economy.
However, serious concerns have been raised over the spike in exchange rate with the rate at the parallel market moving from about N750/$1 to $880/$1, while the 1&E window jumped from around N460/$1 to about N790/$1
