The Nigeria Customs Service (NCS) has reduced the exchange rate for import duties from N1,584/$ on July 22 to N1,541/$, reflecting a N43 drop. This adjustment coincides with the naira’s recent appreciation in the official market.
Data from FMDQ indicates that the naira closed at N1,548 per USD, appreciating by N16 from the previous day’s rate of N1,564/$. This improvement followed the Central Bank of Nigeria’s (CBN) intervention, where it sold $106 million in foreign exchange to licensed Bureau De Change (BDC) operators, causing the naira to gain approximately N100 against the dollar. The CBN’s action aimed to address increased demand from businesses and anticipated seasonal demand.
The CBN previously sold $20,000 to eligible BDCs at N1,450 per dollar, significantly below the official market rate. This intervention, similar to one in March, led to the naira becoming the best-performing currency globally. The CBN faced criticism for allegedly depleting foreign reserves to support the naira, which the Governor denied.
Nigeria’s foreign reserves have increased to $37.05 billion as of July 18, 2024, up from $34.70 billion at the end of June. The CBN Governor stated that the current foreign reserve level could cover 11 months of imports.
In related news, the CBN’s Monetary Policy Committee (MPC) recently raised interest rates by 50 basis points, marking an 800 basis point increase for the year. The committee noted that the narrowing spread between official and parallel market exchange rates indicates improved market efficiency and reduced opportunities for arbitrage. The MPC also emphasized the importance of increasing foreign reserve inflows, particularly through diaspora remittances, to maintain a stable exchange rate.
Credit: Nairametrics (Text Excluding Headline)
