In a recent development, the exchange rate for customs duties collection has held steady at N1,480 to the US dollar, a slight increase from the previous rate of N1467/$. This figure remains just below the official market rate of the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, which stood at N1,482.81 to the USD.
Despite recent fluctuations in the value of the naira, the current exchange rate for customs duties collection mirrors the prevailing rate on the official window. The naira experienced a period of depreciation, crossing the N1500/$ mark approximately two weeks ago, before gradually stabilizing at its current figure.
However, last week marked a notable recovery for the naira, as it gained marginal ground against the US dollar. Starting the week at 1468.99/$1, the naira reached a weekly low of N1,485/$ before settling at N1,481/$ on Friday.
During the same period, the average daily forex turnover ranged from $123 million to $261 million, indicating heightened trading activity possibly driven by speculative actions and adjustments to market positions.
In addition to forex market activities, the Central Bank of Nigeria (CBN) conducted a Nigerian Treasury Bill (NTB) auction on May 22, 2024, offering a total of N508.98 billion. Despite oversubscription reaching N1.5 trillion, only about N638.98 billion was allotted to treasury bill investors. This substantial interest in government securities can be attributed to the recent increase in the Monetary Policy Rate (MPR), making fixed-income securities more attractive to investors seeking yields amidst economic volatility.
Speaking of the MPR, the CBN continued its trend of rate hikes during the week, increasing interest rates by 150 basis points from 24.75% to 26.25%. This marks the third consecutive increase since February, aimed at combating inflation and stabilizing the exchange rate.
However, stakeholders in the business community have expressed concerns about the CBN’s policy initiatives. Both the Centre for the Promotion of Public Enterprise (CPPE) and the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) have criticized the central bank’s interest rate hikes and frequent adjustments to the customs exchange rate.
Dele Oye, President of NACCIMA, advocated for the Nigerian Customs Service (NCS) to collect duties in naira rather than foreign currencies. He emphasized the importance of conducting business in the local currency to prevent the dollarization of the economy and uphold the government’s commitment to promoting the use of the naira.
