The Nigeria Customs Service (NCS) exchange rate for import duties collection has risen to N1508/$- the highest in the past three months dating back to 21st March 2024 when the exchange rate for Customs import duties stood at N1,572/$.
This represents an increase of N38 from the previous figure of N1470/$.
The current increase in the FX rate for customs duties collection reflects the recent weakening of the naira on both the official and parallel window despite relative quietness in June reflecting some level of stability in the FX market.
Calm FX market in June
In the month of June, there was some level of stability in the FX market and even the customs exchange rate. The exchange rate fluctuated between N1,473 and N1,510, closing the month at N1,505.30/$1, indicating a 1.3% depreciation for the month.
This stability in June, despite the topsy-turvy FX market earlier, suggests that the CBN’s reforms and policy measures might be beginning to stabilize the foreign exchange market.
Speaking on the stability seen in June, the Governor of the CBN, Yemi Cardoso said in an interview that Nigerians have seen the worst of exchange rate volatility.
He said, “We are relatively pleased with how far we’ve gotten now. In the past two to three weeks after a period of volatility, we’ve seen a lot of stability in the market. “
“There’s hardly been any movement in the currency. The rates have been merged. We believe this is good and allow companies to plan, and signal to potential investors where the road of travel is in our economy.”
“I do believe that we have more or less seen the worst in terms of volatility”
Notably, in the first half of 2024, the CBN raised the Monetary Policy Rate (MPR) by a cumulative 750 basis points. This move aimed to address the rising inflation rate and attract foreign portfolio investors.
This provided instant impact in the first quarter of the year as foreign portfolio investment rose to $2.07 billion- the highest by a quarter since Q1 2020.
Furthermore, total capital imports in the quarter rose to $3.37 billion, the highest by a quarter since Q1, 2020.
Impact of the high FX rate for import duties
The continued rise in the exchange rate for import duties continues to burden importers and the business community in general as it increases the cost of imports and further exacerbates the inflation rate in the country.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms had earlier stated that the FX rate for import duties will be pegged to the rate used in the 2024 budget which is N800/$ but this is yet to materialise.