Customs duties exchange rate increases by N286.3 in 2 days

The exchange rate for the Nigeria Customs duties collection has risen by N286.3 in just two days in the new month of June from N1,196.6 per USD to N1,482.9/$.

Data from the FMDQ revealed that the naira posted a monthly loss of more than five per cent against the haven currency, settling at N1,485.99 against the greenback at the last day of May, weaker than the N1,402.67/$ quoted at the beginning of last month.

The turbulent 2024 for the naira stems from the supply issues on the forex market. The Central Bank of Nigeria (CBN) has tried to bring stability to the forex market through a variety of policy initiatives. However, since the beginning of the year, it seems none has produced a lasting effect on a stable exchange rate.

Last week, the apex bank issued a circular permitting International Oil Companies (IOCs) operating in Nigeria to sell 50 per cent of their forex proceeds to authorised dealers or legitimate users of forex. Furthermore, it stated that when an IOC does not have use for the forex proceeds, it could sell it to authorised dealers.

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The move is part of efforts by the Central Bank to boost the supply of forex to the market and provide much-needed stability. The bank had earlier in February prevented IOCs from remitting 100 per cent of their forex proceeds by asking them to keep 50 per cent for 90 days- a policy known as cash pooling.

The volatility of the forex market has resulted in the Customs Service regularly changing the exchange rate for duties collection- a policy that has brought great discomfort to Nigerian businesses especially importers.

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele had recommended to the federal government that the customs duties rate be pegged at N800/$- the same rate in the 2024 budget. He argued that pegging the rate at N800/$ allows businesses to plan for the long term and brings uniformity in government actions- as the 2024 budget cannot be operating separately from customs duties rate.

The Customs Service had earlier defended the regular changes in the market as due to the unified exchange rate policy of the CBN stating that it is the apex bank that fixes the rate for duties collection.