The Nigerian Customs Service (NCS) has adjusted the exchange rate for import duty collections from N1492/$ to N1530/$. This change follows a recent depreciation of the naira.
On Thursday, the naira fell to a monthly low of N1533.99/$, according to data from the Nigerian Autonomous Foreign Exchange Market (NAFEM) window. Despite a brief recovery on Wednesday that ended a week-long losing streak, the naira’s value dropped sharply again, hitting its lowest point for the month.
The naira’s performance in May has been notably volatile. A significant surge in forex turnover on Wednesday, rising by 124.56% to $289.14 million, was followed by a slight decline of 5.63% to $272.86 million on Thursday. This decrease in forex liquidity likely contributed to the naira’s depreciation, as limited foreign exchange availability often drives up the exchange rate due to increased demand.
An analysis by Ratecaptain earlier this month highlighted a 26% decline in the naira’s value since it was lauded as the best-performing currency globally by the Central Bank of Nigeria (CBN) and other institutions. The rising customs exchange rate could undermine government and CBN efforts to control inflation, which currently stands at a 28-year high of 33.69%. The CBN has already raised the benchmark interest rate by 600 basis points this year, from 18.75% to 24.75%.
Stakeholders in the business community have expressed concerns over the CBN’s policies aimed at combating inflation and stabilizing the exchange rate. 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 CBN’s interest rate hikes and frequent adjustments to the customs exchange rate. The CPPE suggested that the CBN adopt a quarterly exchange rate for import duties instead of frequent changes, arguing that the current approach could exacerbate inflation.
Dele Oye, President of NACCIMA, advocated for the NCS to collect duties in naira instead of foreign currencies. He emphasized the need for the government to support the use of the naira in business transactions, rather than contributing to the economy’s dollarization through its policies.
As the naira continues to face pressures from fluctuating forex availability and government policies, the business community remains vigilant about the potential impacts on inflation and economic stability.
