The Nigeria Customs Service (NCS) has announced a new exchange rate of N1508 per dollar for import duties, marking the highest rate in the past three months. This adjustment reflects an increase of N38 from the previous rate of N1470 per dollar.
The rise in the customs exchange rate mirrors the recent depreciation of the naira in both the official and parallel markets, despite a period of relative stability in June. The naira’s fluctuation underscores ongoing volatility in Nigeria’s foreign exchange market.
In June, the exchange rate for customs duties varied between N1473 and N1510 per dollar, ultimately closing the month at N1505.30 per dollar, a 1.3% depreciation. This period of relative calm suggests that recent reforms by the Central Bank of Nigeria (CBN) may be beginning to stabilize the market.
CBN Governor Yemi Cardoso commented on the situation, expressing optimism about the recent market stability. “We are relatively pleased with how far we’ve gotten now. In the past two to three weeks after a period of volatility, we’ve seen a lot of stability in the market,” Cardoso stated. He emphasized that the worst of the exchange rate volatility appears to be over, which he believes will help companies plan better and attract potential investors.
In response to rising inflation and to lure foreign investors, the CBN raised the Monetary Policy Rate (MPR) by a cumulative 750 basis points in the first half of 2024. This strategy yielded immediate results, with foreign portfolio investment reaching $2.07 billion in the first quarter, the highest quarterly figure since Q1 2020. Additionally, total capital imports for the quarter rose to $3.37 billion, another peak since early 2020.
However, the higher exchange rate for import duties continues to challenge importers and the broader business community by increasing import costs and exacerbating inflation. The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms had previously indicated that the FX rate for import duties would be pegged to the 2024 budget rate of N800 per dollar, but this adjustment has yet to be implemented.
As Nigeria navigates these economic challenges, the interplay between currency stability, import costs, and inflation remains a critical area of focus for policymakers and the business sector alike.
