The Nigerian naira witnessed a further decline on Tuesday, with exchange rates at the parallel market ranging between 1,005 naira to 1,025 naira against the US dollar. This depreciation has raised alarm bells among small-scale business owners, the Nigeria Employers’ Consultative Association, and manufacturers, who fear the repercussions on their operations and employment.
The naira’s downward trajectory began when the Central Bank of Nigeria allowed the currency to float freely against the US dollar and other global currencies in June. As a result, manufacturers are grappling with challenges in acquiring essential raw materials, with many considering workforce reductions and even factory closures.
Bureau de Change operators reported that the naira exchanged for 1,005 naira to 1,025 naira per US dollar, further emphasizing the scarcity of foreign exchange. The fluctuating rates are causing economic uncertainty, with the situation worsening.
Economists and business leaders warn that the declining naira value could lead to higher production costs, potential job losses, and increased inflation. Additionally, there is concern over the impact of the falling naira on imported goods, which could affect consumers and challenge efforts to promote domestic industries.
In response to the crisis, the Nigerian House of Representatives has directed the Committee on Banking Regulation to investigate the use of the US dollar and other foreign currencies as legal tender in domestic transactions. The House has also called on the Central Bank of Nigeria to take measures to stabilize the currency, combat speculative activities in the forex market, and alleviate the pressure on foreign currencies.
Furthermore, the government is urged to formulate policies and structural reforms to reduce corruption and encourage economic diversification to address the ongoing economic challenges.
The situation underscores the need for swift and comprehensive measures to stabilize the naira and address the broader economic impacts of its depreciation.
