Nigeria’s House of Representatives has moved a motion calling on the country’s central bank to end the continuing devaluation of the naira. In his unanimously adopted motion, House Representative Bamidele Salam warned the Central Bank of Nigeria (CBN) of the negative “implications of further devaluing the naira.”

Lawmakers Slam CBN U-Turn

The House’s warning follows the CBN’s recent decision to devalue naira from an exchange rate of 393 to the current one of just under 411 nairas for every dollar. Furthermore, the Nigerian lawmakers’ call for intervention comes just a few days after the currency marginally depreciated against the USD on the black market. At the time of writing, the naira sell rate on the black market was 502 to the dollar.

Meanwhile, a report points to Salam reminding the CBN governor Godwin Emefiele of his earlier stance on currency devaluation. Before the naira’s devaluation in May 2021, Emefiele had repeatedly defended the country’s overvalued exchange rate. He also slammed parallel market traders for fueling the naira’s continued depreciation on the forex black market.

Still, in expressing his exasperation with the CBN’s exchange rate policies, Salam said:

The House is concerned that devaluation is likely to cause inflation because imports will be more expensive – any imported goods or raw material will increase in price; Aggregate demand increases, causing demand-pull inflation. Firms/exporters have less incentive to cut costs because they can rely on the devaluation to improve competitiveness.

Salam adds that lawmakers are now concerned that any “long-term devaluation (of the naira) may lead to lower productivity because of the decline in incentives.”

CBN Abandons Multiple Exchange Rate Policy

Since the year 2020, the CBN has adopted a multiple exchange rate policy as it sought to avoid an outright devaluation. For instance, Nigeria’s previous official exchange of 393 naira to one dollar was “used as a basis for budget preparation.” On the other hand, the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology (NAFEX) is a closely controlled exchange rate for investors and exporters.

Following the devaluation of the naira, the official exchange rate and the NAFEX are now both pegged at just under 411 to the dollar. In the meantime, the report also quotes Salam explaining some of the possible implications of a rapid devaluation on the Nigerian government’s ability to raise funds. The lawmaker said:

“It makes investors less willing to hold government debt because the depreciation effectively reduces the actual value of their holdings. In some cases, rapid devaluation can trigger capital flight.”

Do you agree that the devaluation of the naira will cause inflation? You can share your views in the comments section below.

Bitcoin News
Economics, Central Bank of Nigeria, currency black market, currency depreciation, Foreign exchange, Godwin Emefiele, inflation, multiple currency regimes, naira devaluation

nba gH9cS1

Coinbase Becomes Exclusive Cryptocurrency Platform for NBA, WNBA, USA Basketball

Cryptocurrency exchange Coinbase has partnered with the National Basketball Association (NBA). The Nasdaq-listed crypto company is now the exclusive cryptocurrency platform partner of the NBA, Women’s National Basketball Association (WNBA), ...
Read More
image 2021 10 19 174907 ONeXhz

Proshares Bitcoin Strategy ETF Debut Captures Close to $1 Billion in Volume

The first bitcoin exchange-traded fund (ETF) launched in the United States and smashed records on Tuesday, capturing close to $1 billion in total volume. Eric Balchunas, the senior ETF analyst ...
Read More
playdapp1280x720 BJMkiN

Chimeras Play-to-Earn Metaverse Completes Successful Funding Round

PRESS RELEASE. Chimeras successfully raised over $2 million in its latest fundraising round, which will help to fund the play-to-earn project’s market and product development. October 18th, 2021 – The ...
Read More
shutterstock 770443894 bkXdc6

Concierge Service Catering to Crypto Whales Sees 500% Increase in Clients Over the Last 6 Months 

On Tuesday,, the exclusive travel service backed by announced it added new luxury services in order to give crypto investors “a more premium experience to live out their ...
Read More
shutterstock 1751887064 new BPM0pG

Iran to Pilot ‘National Cryptocurrency,’ Amend Central Bank Law

The central bank of Iran is gearing up to begin the pilot phase of its digital currency project in the near future, its new head announced to representatives of local ...
Read More
Share with Others