The Central Bank of Nigeria (CBN) has raised the exchange rate for customs clearance at ports from N1537.07 to N1605.82 per USD, an increase of N68.75, reflecting an adjustment to market conditions.
In response to the Naira’s volatility, the CBN and Nigeria Customs Service have adjusted the exchange rate for cargo clearance three times in the last week, as indicated by the federal government’s trade portal, to ensure accurate valuation amidst fluctuating market dynamics
The Comptroller-General of the Nigeria Customs had earlier stated that the service does not fix the exchange rate for cargo clearance rather it was the duty of the apex bank to deal with issues pertaining to exchange rate.
What you should know
The hike in the exchange rate for cargo clearance implies that Nigerians will incur higher costs for clearing goods, a scenario that will lead to a rise in prices for the end consumer. Nigeria is currently battling a severe cost of living crisis with inflation at a 28year high at 29.90% as of January 2024.
- This situation has threatened law and order across the country with threats and pockets of protest recorded across some major cities in the country over rising cost of living. The African Development Bank had warned that rising cost of fuel and commodity could lead to social unrest not just in Nigeria but Kenya and others.
Recommended reading: Customs to use CBN’s official exchange rate for cargo clearance- Comptroller General
Insights
- Yesterday, the naira dropped to a record low on the parallel market at N1,830 to the USD according to the Nairametrics daily FX monitor. This represents a 7.10% decline from the N1700/$ it exchanged for the previous day. The continued drop in the value of the naira defies the reforms enacted by the CBN aimed to shore up the value of the naira in the near term. The naira currently trades at N1693.9/USDT on Binance this morning.
- In the past few days, multiple reports in the media claim the CBN in collaboration with the federal government is planning to bar access to Nigerians trading the forex on Binance platform. I recent times, Nigerians have thronged the platform for Peer-to-Peer exchange of forex.
- The Governor of the CBN had blamed the volatility of the Nigerian forex market on speculation claiming that the naira is undervalued and with time it will return to its true value.