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Nigerian lawmakers have adopted an official exchange rate of 305 naira per dollar for the 2017 budget but have asked the Central Bank of Nigeria (CBN) to initiate measures to close the 40 percent spread with the black market, deputy senate president said on Wednesday.
Members of the upper house of parliament said during a review of the budget on Wednesday that they were worried about the exchange rate differential, which they described as damaging to the economy and said had led to a loss of investor confidence.
“We are worried by the huge gap. The CBN needs to do something about it and stabilize the currency. We must find a way of bridging the gap and restore investor confidence,” deputy senate president, Ike Ekweremadu read out in the house.
The naira’s official rate, controlled by the government, has hovered just above 300 to the dollar since it was devalued in June. But the gap, 40 percent stronger than the parallel market, is discouraging investment from overseas and leaving Nigeria starved of foreign currency.
Echoing the senate’s concerns, Vice President Yemi Osinbajo said on Tuesday that Nigeria needed to close the gap “very soon”, as Africa’s largest economy grapples with inflation and the risks of devaluation.
The official and black market naira foreign exchange rates will be “unified” this year, but there is no time frame for when it could happen, said Osinbajo.
Financial institutions, among others, have argued that Nigeria must allow its currency to float freely to solve its foreign exchange woes, a measure which has met opposition from President Muhammadu Buhari.
In an effort to step up the foreign currency shortfall, Buhari’s government has been in talks with financial institutions, including the World Bank, for loans.
But those efforts to secure funds have stalled because Nigeria has not submitted the required economic reform plans, according to one of the banks and sources close to the matter.