Again, CBN Adjusts Customs Exchange Rates for Cargo Clearance as Naira Crashes against Dollar
- The Central Bank of Nigeria has adjusted the Customs FX rate for cargo clearance again for the second time in three days
- The CBN hiked the rate to N1,441.53 per dollar, which is N39.53 above the official exchange rate of N1,402 per dollar that the naira traded at on Thursday, May 2, 2024
- The development comes as experts have asked the CBN to adopt a quarterly FX rate for Customs duty clearance
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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.
Despite expert advice, the Central Bank of Nigeria (CBN) has again adjusted the Customs exchange rates for cargo at Nigerian ports.
The apex bank fixed the exchange rate for Customs duty collection at N1,441.53 per dollar from the N1,373.64 it fixed the rate two days ago.
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Customs duty rate increases by N61
The figure represents an increase of N61 from the former amount.
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The current figure is above the official exchange rate of May 2, 2024, when the naira closed at N1,402.67 per dollar.
The naira closed at N1,380 per dollar in the parallel market on May 2, 2024.
Reports say the naira has depreciated against the US greenback after performing strongly in March and April, becoming the world’s best-performing currency.
The Nigerian currency opened the month of May on a negative note, declining by about 0.74% to N1,360 per dollar compared to the last trading day in April.
FX market records improvement in March and April
The foreign exchange market has witnessed improved liquidity in March and April, rising to $7.3 billion.
According to data from the FMDQ Exchange, FX sales records show improved liquidity in the market, as $4.7 billion in transactions were recorded in March 2024.
Analysts believe that the FX sales to the operators spurred the naira's performance in April, making the Nigerian currency the world’s best-performing currency.
The naira appreciated in the official market on Tuesday, April 30, 2024, to trade at N1,390 per dollar, up from N1,419 on Monday, April 29, 2024.
The naira has been on a downward spiral for eight straight days, losing about 5.5% in value, the highest loss since March 13 this year.
Experts ask CBN to adopt methods for Customs duty
Punch reports that the naira dropped in value following slowed inflows and sustained withdrawals by the Foreign Portfolio Investment.
On Tuesday, April 30, 2024, the naira reached an intraday high of N1,450 per dollar, up from the previous day's N1,451.
Experts believe the naira's recent decline is due to a liquidity squeeze, as CBN has yet to sell FX to Bureau de Change (BDC) operators in the last week.
The Centre for the Promotion of Private Enterprise (CPPE) has asked the CBN to adopt a quarterly exchange rate for Customs as frequent adjustments discourage trade and hurt imports.
The centre recommended an FX rate of N1,000 per dollar for import duties.
In an interview with Legit.ng, financial expert and FX trader Nnadozie John said the fluctuation in Customs FX rates hurts trade and drives away investors.
He said investors would prefer a stable atmosphere to a volatile one, asking the CBN to try out a quarterly FX rate for Customs duty and see what happens.
His words:
"It does not matter if the Customs FX is at N1,800 or even N2,000 per dollar; there has to be some sort of stability. Investors and importers want some stability in the rates. If you change the rates more than they fluctuate in the markets, it is detrimental to businesses and investments.
"Adopting a quarterly rate will restore confidence and drive investment in the maritime sector.
"Many people have stopped importing goods because of the volatility while others have abandoned their cargoes at the ports for the same reason."
ABCON moves to unify black market operations
Legit.ng earlier reported that the Association of Bureau de Change Operators of Nigeria (ABCON) had announced plans to establish unified retail end FX market operations.
ABCON president Aminu Gwadabe recently revealed that the move would tackle market volatility and boost regulatory compliance within the BDC subsector.
The ABCON chairman said the association is making strategic plans to unify operations from different cadres of the currency market.
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Source: Legit.ng
