The exchange rate for customs duty collections has risen to N1502.1/$, the highest in seven weeks going back to March 22nd when the figure stood at N1572/$.
This is according to the Nigerian Customs Service (NCS) portal for trade, where the exchange rate has increased from N1457/$ to its current figure over the two-day period.
This recent increase in the exchange rate for duties collection by the NCS reflects the prevailing rate in the foreign exchange market. Yesterday, May 14, the naira closed at N1520/$ on the official NAFEM window, representing a 2.78% depreciation, the lowest in six weeks.
Over the past week, the Naira has seen a sharp decline, dropping by roughly 11% in the official market. This significant decrease highlights the ongoing difficulties in stabilizing Nigeria’s currency.
Reasons for the recent depreciation of the Naira
The depreciation of the naira in the past few weeks can be attributed to the inconsistent supply of forex to the market and traders.
On Tuesday, the forex market experienced a significant decrease in daily turnover, plummeting by approximately 41% to close at $128.76 million, down from $217.64 million the previous day.
This drop illustrates the volatile nature of dollar availability, which had surged by an impressive 91% just the day before, underscoring the unpredictable shifts in foreign exchange supply to the official market.
In an exclusive report by Nairametrics, a senior Bureau De Change (BDCs) operator attributed the recent depreciation of the naira to a major lack of supply of forex by the Central Bank of Nigeria (CBN) and strongly rejected the claim by some that BDC operators are the cause of the recent weakening of the naira.
He stated, “The CBN last provided dollars to only about 30% of licensed operators. The volume and frequency of dollar supplies from the CBN are discouragingly low. We often have to source dollars independently.”
“We haven’t received more than $30 to $40 million total in the last three months,” he lamented, describing the pace of allocations as “snail-speed.”
“We often ignore fundamental economic issues in this country and chase after less relevant matters. Such strategies inevitably lead to errors. The fundamentals, as we all know, are centred around liquidity issues. The AFEM (Autonomous Foreign Exchange Market) window isn’t being adequately utilized. Why isn’t more attention given to what’s happening there, or do they think BDCs operate in isolation from the rest of the economy?”
Efforts to curb forex manipulation online
To curb the external threats contributing to the depreciation of the naira, the Economic and Financial Crimes Commission (EFCC) and the Securities and Exchange Commission (SEC) have announced a collaboration aimed at tacking manipulators of the naira on the virtual space.
The Chairman of the EFCC, Mr. Ola Olukoyede, stated that forex malpractices and crises harm the economy. He emphasized the need to regulate the activities of virtual traders.