The exchange rate for import duty collections by the Nigerian Customs Service (NCS) has increased by N38 from N1492/$ to N1530/$, according to the latest update on the NCS exchange rate portal.
The increase in the customs exchange rate follows the depreciation of the naira on Thursday.
The Naira depreciated to a monthly low of N1533.99/$, according to data from the NAFEM window. The exchange rate had bounced back on Wednesday, breaking a week-long losing streak. However, this rebound proved short-lived, as the rate soon dropped to its lowest point this month.
This depreciation came after a significant shift in forex turnover. On Wednesday, forex turnover surged by an impressive 124.56%, reaching $289.14 million.
However, by Thursday, it had marginally declined by 5.63% to $272.86 million. This tightening of forex liquidity likely contributed to the naira’s sharp decline in value in the official market.
When foreign exchange availability decreases, pressure on the naira increases as demand outstrips supply. This scenario often leads to higher exchange rates, as seen on Thursday.
An earlier analysis by Nairametrics on the naira’s performance in May revealed a 26% decline since the CBN and other institutions declared it the best-performing currency in the world.
The continued increase in the exchange rate for customs duties collection could dim the Federal Government and CBN’s effort at moderating the inflation rate which currently stands at a 28-year high of 33.69%. The apex bank has increased the benchmark interest rate by 600 basis points from 18.75% to 24.75% this year alone.
Stakeholders in the business community have lampooned the apex bank over its policy initiatives in combating inflation and stabilising the exchange rate.
The Centre for the Promotion of Public Enterprise (CPPE) and the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) have both criticized the CBN on the hike in interest rates and consistent adjustments in the customs exchange rate.
The CPPE stated that the hike in interest rate together with fluctuations in the customs duties rate could fuel inflation across the country. The Center had earlier advised the CBN to adopt a quarterly exchange rate for import duties calculation rather than the regular changes.
Mr. Dele Oye, President of NACCIMA, stated that the Nigerian Customs Service (NCS) should collect duties in naira instead of foreign currencies. He explained that the government must walk its talk of doing business in Naira rather than support, through its action, the dollarisation of the economy.