The Nigeria Customs Service (NCS) has raised the exchange rate for collecting customs by N3, surpassing the official Naira closing rate during the NAFEM window.
Examining the customs exchange rate webpage reveals that the FX rate for collecting duties is N1584/$, however, FMDQ data indicates that the naira closed at N1581 to the US dollar on July 17, 2023.
The exchange rate for customs taxes, which is currently N1584/$, is the highest since March 2024, when the naira fell to around N1600/$. Â
Despite efforts by the Central Bank of Nigeria (CBN) to increase supply in the foreign exchange market, the value of the naira has declined recently relative to the US dollar.
Growth in Foreign Exchange Turnover
The official foreign exchange (FX) market in Nigeria had a 40% increase in turnover last week, which was rather noticeable. The News Chronicles collected data from the FMDQ that shows a $292.75 million increase from $740.92 million to $1.03 billion this week (July 8 to 12, 2024) last week (July 1 to 5, 2024).
The first week of June saw the weekly FX turnover surpass $1 billion for the first time, with a total of $1.05 billion recorded. Following the CBN’s covert participation in the foreign exchange market through the sale of FX to approved dealers, there has been an increase in FX turnover.
CBN offers FX to approved dealers
The Central Bank of Nigeria (CBN) sold dollars valued at $122.67 million to 46 authorized dealers over two days, which caused a spike in foreign exchange turnover this week.
The CBN’s Director of Financial Markets, Dr. Omolara Duke, revealed in a statement that the apex bank bought $2.5 million from one authorized dealer and sold $67.5 million to 27 authorized dealers on Wednesday.
Payments for these transactions were scheduled for July 12, 2024, after a two-day settlement cycle (T+2). The bid range was N1,480/$1 to N1,500/$1.
On Thursday of last week, the CBN sold $55.17 million at a cost of N1,540.0/$1 to 19 authorized dealers. The spot sales payments were due on July 15, 2024, and no foreign exchange was purchased on this date.
All authorized dealers were also asked by the CBN to make sure that the foreign exchange they buy from the bank is only utilized for trade-backed transactions, which need to be reported to the CBN within 72 hours.
The apex bank is gearing up for its fourth Monetary Policy Committee (MPC) meeting next week, where it will determine whether to retain or continue raising interest rates. This is the reason for the naira’s renewed slow devaluation. Â
