The exchange rate for duties collection by the Nigeria Customs Service (NCS) has risen by N3 above the official closing rate of the Naira on the NAFEM window.
Checks on the customs exchange rate portal reveal that the FX rate for duties collection stands at N1584/$ while the naira closed at N1581 to the greenback on the 17th of July, 2023 according to FMDQ data.
The current customs duties exchange rate of N1584 /$ is one the highest since March 2024 when the naira depreciated near the N1600/$ mark.
In recent times, the naira has weakened against the USD despite efforts by the Central Bank of Nigeria (CBN) to boost supply in the foreign exchange market.
Increase in FX turnover
Last week, the Nigerian official foreign exchange (FX) market experienced a notable surge in turnover, rising by 40%. Data gathered by Nairalytics, the research arm of Nairametrics, from the FMDQ indicates an increase of $292.75 million, from $740.92 million last week (July 1 to 5, 2024) to $1.03 billion this week (July 8 to 12, 2024).
The last time the weekly FX turnover exceeded the $1 billion mark was in the first week of June, with a total of $1.05 billion recorded. The rise in FX turnover comes on the heels of CBN’s tacit intervention in the foreign exchange market by selling FX to authorised dealers.
CBN sale of FX to authorised dealers
- The surge in FX turnover this week was driven by a two-day sale of dollars worth $122.67 million to 46 authorized dealers by the Central Bank of Nigeria (CBN).
- In a statement by Dr. Omolara Duke, the Director of Financial Markets at the CBN, it was disclosed that the apex bank sold $67.5 million to 27 authorized dealers and purchased $2.5 million from one authorized dealer on Wednesday.
- The bid range for these transactions was between N1,480/$1 and N1,500/$1, with payments scheduled for July 12, 2024, following a two-day settlement cycle (T+2).
- Last week Thursday, the CBN sold $55.17 million to 19 authorized dealers at a rate of N1,540.0/$1. No foreign exchange was purchased on this date, and payments for these spot sales were due on July 15, 2024.
- The CBN also urged all authorized dealers to ensure that foreign exchange purchases from the bank are exclusively used for trade-backed transactions, which must be reported within 72 hours.
- The renewed gradual depreciation of the naira comes as the apex bank prepares for its fourth Monetary Policy Committee (MPC) meeting next week where it will decide whether to hold or continue interest rate hikes.
