CBN Slashes FX Rate for Cargo Clearance as Customs Begins Duty-Free Implementation amid Naira Gains
- The Central Bank of Nigeria (CBN) has adjusted the exchange rates for cargo clearance in Nigeria’s ports
- The new rates affect Customs duty rates for importers bringing goods into Nigeria via air, land, and sea
- The development comes after the naira appreciated for two consecutive days, rising from N1,617 to N1,601 per dollar
Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.
The Central Bank of Nigeria (CBN) has reduced the foreign exchange rates for cargo clearance after the naira appreciated against the US dollar for two days.
Data from the Customs trade portal shows that the apex bank adjusted the rate to N1,592.636 as of Wednesday, August 7, 2024, from the N1,618.73 reported on Monday, August 5, 2024.
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Dollar crashes in official market
The development means Nigerian importers opening Form M will pay less than they spent the previous day.
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Analysts also believe the new adjustment will affect the prices of goods in the country as the importers reflect the cost of cargo on prices.
The development comes as the Nigerian currency, the naira, appreciated against the US dollar for two consecutive days, beginning Monday, August 5, and Tuesday, August 6, 2024.
On Monday, August 5, 2024, the naira traded at N1,608 per dollar, up from the N1,617 it traded on Friday, August 2, 2024. On Tuesday, it appreciated further to N1,601 per dollar.
CBN commences Retail Dutch Auction System
Analysts have attributed persistent volatility in the country’s exchange rate market to liquidity issues.
The Central Bank of Nigeria (CBN) hopes to reverse the naira's poor performance in the foreign exchange market by beginning dollar sales via retail auction today, Wednesday, August 7, 2024.
The apex bank hopes that selling dollars at a retail auction today will halt the trend of naira depreciation.
BusinessDay reports that the CBN has already received a list of all outstanding FX demand by end-users from authorized dealer banks after telling them in a circular that it was diverging from the usual wholesale auctions to banks.
However, a previous report by Legit.ng shows that FX Spot and Derivatives markets’ turnover for the week ended August 2, 2024, stood at $1.087 million, representing a decline of 16.5% or $215.24 million from $1.302.57 million recorded on July 26, 2024.
Weekly analysis on the FMDQ Securities Exchange shows a decrease in total turnover, which was driven by the 16.8% decline in FX spot turnover. The total value was $1.087.72 million compared to the $1.302.57 million recorded in the week ended July 26, 2024, erasing the $3.61 million increase in FX derivatives turnover.
Naira depreciates in NAFEX in one week
FMDQ disclosed that the weekly increase in FX derivatives turnover was mainly driven by the $3.61 million increase in FX forwards turnover. At the same time, there was a consistent lack of activity in the exchange-traded FX Futures and Cleared Naira-Settke Non-Deliverable Forwards.
According to reports, within the period, the Nigerian Autonomous Foreign Exchange Fixing (NAFEX) stood at N1,610.56 per dollar, compared to N1,584.4 million recorded in the week ended July 26, 2024.
Analysts believe that foreign exchange liquidity is expected to remain weak due to the Central Bank of Nigeria (CBN) 's weak interventions.
Codros Capital disclosed that heightened global interest rates and geopolitical uncertainties may weaken foreign inflows.
FX inflow declines in one week
FMDQ data shows that total inflows into the Nigerian foreign exchange market declined to a five-month low in July, decreasing by 4.4% monthly to $1.9 billion from $2.01 billion recorded in June.
The drop was due to a contraction in FX inflows. Collections from foreign sources dipped by 51.4% monthly to $243.3 million from $500.2 million due to weaker collections from portfolio investments of about 58.8% and others declining by negative 32.1% despite the rebound in foreign direct investment of 1.705.9.
Customs set to begin import waiver, set rules
Legit.ng earlier reported that the Ministry of Finance is developing a framework to guide the expected huge food imports that will soon begin.
The move is one strategy of the Nigerian government to ease the high cost of living across the country.
The framework will be ready next week, the Nigeria Customs Service Comptroller General, Adewale Adeniyi, said on Tuesday, August 6, 2024.
Proofread by Kola Muhammed, journalist and copyeditor at Legit.ng
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Source: Legit.ng
