The exchange rate for customs duties collection has risen from N1467/$ to N1,480 just below the official market rate of the NAFEM window which stood at N1,482.81 to the USD.
The current exchange rate for the customs duties collection mirrors the prevailing rate on the official window despite the naira’s recent depreciation. The naira had crossed the N1500/$ mark about two weeks ago before gradually settling at its current figure.
Last week, the Naira showed a remarkable recovery, gaining marginal ground against the US dollar. The Naira started the week then at 1468.99/$1 and reached a weekly low of N1,485/$ before settling at N1,481/$ on Friday.
On the other hand, average daily forex turnover ranged from $123 million and $261 million in the week.
Sales of T-bills
Additionally, during the week, the CBN offered a total of N508.98 billion during the Nigerian treasury bill (NTB) auction held on May 22, 2024. The subscription levels significantly surpassed the initial offer, highlighting the continued appetite for fixed-income securities amidst a volatile economic landscape.
Despite the oversubscription reaching N1.5 trillion, only about N638.98 billion was allotted to treasury bill investors. The heightened interest in treasury bills can be attributed to the recent increase in the MPR, making government securities more attractive to yield-seeking investors.
The increase in forex turnover on Thursday suggests heightened trading activity, possibly driven by speculative actions and adjustments to market positions.
Increase in MPR by the CBN and business concern
Furthermore, during the week also, the CBN continued its MPR hike increasing interest rates by 150 basis points from 24.75% to 26.25%- the third consistent increase since February.
Stakeholders in the business community have criticized the apex bank for its policy initiatives 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 expressed discontent with the CBN’s interest rate hikes and frequent adjustments to the customs exchange rate.
- The CPPE stated that the increase in interest rates, coupled with fluctuations in customs duties rates, could exacerbate inflation across the country. The Center had previously advised the CBN to adopt a quarterly exchange rate for import duties calculations instead of making regular changes.
- Dele Oye, President of NACCIMA, argued that the Nigerian Customs Service (NCS) should collect duties in naira rather than foreign currencies. He emphasized that the government must uphold its commitment to conducting business in Naira instead of indirectly supporting the dollarization of the economy through its policies.