The exchange rate for customs duties collection by the Nigeria Customs Service (NCS) has increased, surpassing the official market rate once more. According to the customs exchange rate portal, the current rate for duties stands at N1584/$, whereas the official Naira closing rate on the NAFEM window was N1581/$ as of July 17, 2023, based on data from FMDQ.
This recent rise places the customs duties exchange rate at one of its highest points since March 2024, when the Naira approached the N1600/$ mark.
Despite efforts by the Central Bank of Nigeria (CBN) to enhance foreign exchange supply, the Naira has continued to weaken against the US dollar.
Increase in FX Turnover
Last week, Nigeria’s official foreign exchange (FX) market witnessed a significant surge in turnover, climbing by 40%. Data from Nairalytics, the research division of Nairametrics, shows an increase from $740.92 million in the first week of July to $1.03 billion in the second week. The last instance of weekly FX turnover exceeding $1 billion was in early June, with a total of $1.05 billion recorded.
This boost in FX turnover aligns with CBN’s discreet interventions in the market, involving sales of FX to authorized dealers.
CBN’s FX Sales to Authorized Dealers
The surge in FX turnover was driven by a two-day dollar sale totaling $122.67 million to 46 authorized dealers by the CBN. Dr. Omolara Duke, CBN’s Director of Financial Markets, stated that the bank sold $67.5 million to 27 dealers and purchased $2.5 million from one dealer on Wednesday, with a bid range between N1,480/$1 and N1,500/$1. Payments were scheduled for July 12, 2024, following a two-day settlement cycle (T+2).
Additionally, on Thursday of the previous week, the CBN sold $55.17 million to 19 authorized dealers at a rate of N1,540.0/$1, with no FX purchases on that date. Payments for these spot sales were due on July 15, 2024.
The CBN emphasized that all foreign exchange purchases by authorized dealers must be strictly used for trade-backed transactions, which should be reported within 72 hours.
Looking Ahead
The gradual depreciation of the Naira is occurring as the CBN prepares for its fourth Monetary Policy Committee (MPC) meeting next week. The committee will decide whether to maintain or adjust interest rates in response to ongoing economic conditions.
