House of Representatives yesterday mandated its Committee on Banking Regulation to investigate the use of the United States dollar and other foreign currencies as legal tender for domestic transactions in Nigeria.
The decision followed the adoption of a motion sponsored by Hon. Ismaila Haruna Dabo (PDP, Bauchi).
The House called on the Central Bank of Nigeria (CBN) to address the impact of the failing naira against the dollar and other currencies.
The House urged the CBN to implement monetary policy adjustments to stabilise the currency, address speculative activities in the forex market, and increase the withdrawal limit of the naira to reduce the pressure on dollars and other foreign currencies.
It also urged the Federal Government to formulate policies and structural reforms to reduce corruption and promote economic diversification within the nation’s economy.
The House further urged the Federal Government to promote exportation and reduce importation by enhancing foreign investors’ confidence in its fiscal and monetary policies.
It mandated the committees on Banking Regulations and National Security and Intelligence to interface with the CBN with the purpose of initiating compliance strategies.
Presenting the motion, Hon. Dabo said: “The House is worried about inflation and the cost of living, depreciating naira makes imported goods more expensive, leading to higher inflation rates. This increased cost of living disproportionately affects the most vulnerable citizens, as they struggle to afford basic necessities, which are now glaring across the country.
“The House is aware that a weaker and depreciating naira could increase Nigeria’s external debt servicing costs, potentially reducing government spending on critical sectors like healthcare and education.
“The House is also aware that the Central Bank of Nigeria (CBN) frequently uses its foreign reserves to stabilise the naira, but this can deplete its reserves, making the country vulnerable to economic shocks.”
He noted that in June 2023, the President of the Federal Republic of Nigeria, Bola Ahmed Tinubu through the Central Bank of Nigeria announced changes to the country’s foreign exchange market.
This, he said, was so that the foreign currencies can now be bought and sold at rates determined by the market and not by the CBN. He said the naira has lost a large per cent of its value against the dollar, falling from N778.602/$ as of September to nearly N1000/$ at the parallel market. According to him, this marks the first time Nigeria has liberalised its foreign exchange market.
The motion was unanimously adopted.