Customs Exchange Rate for Import Duties Surges to N1441/$, Exceeding Official Rate

• Customs duty collection sees a significant increase in exchange rate to N1,441.53 per USD, up by N61
• Naira’s recent depreciation contrasts its strong performance in March; concerns arise over CBN’s lack of intervention in FX market

The exchange rate utilized for customs duty collection has experienced a notable increase, rising to N1,441.53 per USD in the past two days from N1,373.64/$ at the start of the month. This upward adjustment reflects a significant increment of N61 from the previous rate.

The newly established foreign exchange (FX) rate for import duties now surpasses the official market rate of the naira recorded on 2nd May 2024, where the naira closed at N1,402.67/$. Similarly, in the parallel market, the naira concluded trading at N1,380 to the greenback on the same day.

Over the past two weeks, the naira has witnessed considerable depreciation, contrasting its robust performance in March, when Goldman Sachs lauded it as the best-performing currency globally. Compared to the final trading day of April, the commencement of the new month saw the naira depreciate by 0.74% to N1,360/$.

The recent weakening of the naira has raised liquidity concerns, especially as the Central Bank of Nigeria (CBN) has refrained from intervening in the FX market through dollar sales to Bureau De Change (BDCs) operators for nearly two weeks.

April appeared relatively subdued for the CBN, departing from the flurry of reforms and policy updates witnessed in the first quarter of the year.

The naira’s depreciation challenges the CBN’s efforts to stabilize the exchange rate and curb inflation. Governor of the apex bank, Yemi Cardoso, had previously acknowledged the pass-through effect of the elevated exchange rate on inflation.

The Centre for the Promotion of Private Enterprise (CPPE) has urged the CBN to address inflation and foster stability to facilitate business planning. The centre advocated adopting a uniform exchange rate to instil certainty in the trade sector.

As we advance, the CPPE proposes a rate of N1000/$ for import duties. This emphasizes the importance of the CBN’s decisive action to mitigate economic uncertainties and support business activities.