The Nigerian currency, the naira, has hit a new low against the US dollar in the official market. The Senate has invited the Central Bank of Nigeria (CBN) governor to explain the situation and offer solutions.

Naira crisis

The naira fell to N1,520 to a dollar on Tuesday, the lowest level ever recorded in the official window. This represents a 12.8% depreciation from N1,348, the previous rate on Monday.

However, the naira’s plunge has raised concerns among Nigerians, who rely heavily on imports for their daily needs. Many fear that the weak currency will fuel inflation, which hit a 21-year high of 18.2% in December 2023.

The naira’s decline has also affected the parallel market, where most Nigerians source foreign exchange. Also, the naira traded at N1,650 to a dollar on Tuesday, according to AbokiFX, a website that tracks the unofficial rates.

Also, the naira’s woes have been attributed to several factors, including low oil prices, dwindling foreign reserves, high demand for dollars, and the impact of the coronavirus pandemic on the economy.

Senate intervention

The Senate, the upper chamber of Nigeria’s parliament, has decided to intervene in the naira crisis. On Wednesday, the Senate Committee on Banking, Insurance, and Other Financial Institutions summoned the CBN governor, Olayemi Cardoso, to appear before it on Tuesday next week.

The committee, chaired by Senator Adetokunbo Abiru, said it wanted to hear from the CBN governor on the state of the economy and the measures taken to stabilize the naira.

“We have held a meeting this afternoon essentially to focus on the direction of the Nigerian economy. We are all living witnesses of what is going on. Underlining the major issue of the economy is the way the inflation index has been and of course, it is a major concern to us,” Abiru told journalists after the meeting.

He added: “We have deliberated among ourselves. Critical issues were addressed and we believe that the next line of action is to summon the Governor of the Central Bank on Tuesday at 3 O’clock to brief us properly on the state of the economy. That we have resolved and will communicate to the Governor of the Central Bank after which we will have further communication with members of the press.”

The Senate’s move comes as the CBN has been implementing various policies to boost the supply of dollars and ease the pressure on the naira. The CBN has also warned forex dealers against engaging in sharp practices and manipulating the exchange rate.

Despite the challenges facing the naira and the economy, some experts and analysts have expressed optimism that the situation will improve in the near future.

In addition, they have cited the expected increase in oil revenue, the ongoing vaccination campaign against COVID-19, the implementation of the African Continental Free Trade Area (AfCFTA), and the reforms in the banking and power sectors as positive factors that will boost the economy and the naira.

They have also urged the government and the CBN to adopt more flexible and market-driven policies to attract foreign investors and enhance the competitiveness of the Nigerian economy.

Source: Punch