Senate Summons Emefiele Over Falling State Of Naira
When the Governor of the Central Bank of Nigeria, Godwin Emefiele, appears before the Upper Chamber of the National Assembly, it will be to explain why the naira is depreciating rapidly against other currencies, especially the dollar.
The naira has had its worst free fall in a space of 24 hours, depreciating against the greenback to N710 on Wednesday night from N670 on Tuesday at the parallel market.
About a month ago, the naira was hovering N615/$1, showing that the naira has depreciated by over 15 per cent.
Unease with the continuous free fall of the naira, the Senate on Wednesday summoned CBN governor to come and educate and inform the senators on the reasons behind the rapid depreciation of the value of the naira.
Before then, the Senate Committee on Banking, Insurance and Other Financial Institutions is expected to assess the impact of CBN intervention funds meant to support critical sectors of the economy.
In its resolutions, the chamber called on the CBN to urgently intervene to stop the rapid decline in the value of the naira vis-à-vis the dollar and other international currencies.
The resolutions were reached by lawmakers after the upper chamber considered a motion sponsored by Senator Olubunmi Adetunmbi (APC – Ekiti North).
In a motion entitled, ‘State of CBN Intervention Funds and Free Fall Of Naira’, Adetunmbi based his motion under Order 41 and 51 of the Senate Standing Order, as amended.
He had bemoaned Nigeria’s economic reality amid an urgent call for “extraordinary measures”, noting that the CBN through its numerous multi-sectoral intervention funds, provided special funds to support critical sectors of the economy.
In view of such interventions, Adetunmbi said it had become necessary to assess the state of implementation and effectiveness of the funds deployed for the purpose.
He recalled that the CBN in 2021, placed an indefinite suspension on forex sales to the Bureau de Change operators (BDCs) over allegations of abuse and mismanagement.
According to Adetunmbi’s observation, the halt by the CBN resulted in a spike of the exchange rate.
He said, “The two instruments of Personal Travel Allowance (PTA) and Business Travel Allowance (BTA) could only serve less than 20% of the total forex demand by travelers and businesses.”
He equally expressed worry that the import and export window meant to serve the forex needs of business giants, “has become a rare opportunity that only a privileged few can access.”
“These and a number of others have contributed to the excessive scarcity of forex in Nigeria today”, Adetunmbi added, noting that as at July 26, the exchange rate in the autonomous segment (BDCs) of the foreign exchange market was N670/$1, and projected to end at N1000 by end of the year based on the current rate of depreciation.
Senator Sani Musa (APC – Niger East), in support of the motion, faulted the central bank’s decision to halt foreign exchange biddings, thereby cutting off the parallel market operators.
He said the attempt by the CBN to control the value of the naira with the continuous exclusion of BDCs would only lead to its further depreciation, calling on the apex bank to rather ensure the regulation and monitoring of the parallel market.
“What CBN used to do was to give out $10,000 (USD) to each of these BDCs with a clear directive for it not to be sold above N470 as against the $419 exchange rate. It worked.
“But today, nobody is determining where the rate is going and I can assure you we can’t have that solution because we are only importing,” Musa added.
One way to improve the value of the naira is to encourage foreign investments to attract inflow of other currencies into Nigeria, the Senator representing Katsina North District, Ahmad Babba-Kaita, said.
“The only way we can access the dollar will be determined by other economies and not ours”, Babba-Kaita noted.
He, however, attributed the lack of foreign investments into Nigeria on the poor security situation caused by banditry, terrorism and other criminal activities.
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