Nigeria Customs Slashes Exchange Rate For Import Duty

Nigeria Customs Slashes Exchange Rate for Import Duty

– By majorwavesen

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Nigeria Customs Slashes Exchange Rate for Import Duty

The Nigeria Customs Service (NCS) has announced a reduction in the exchange rate for import duty collection, setting it at N1,147 per dollar compared to the previous rate of N1,238 per dollar. This latest adjustment reflects a decrease of N91.1 since the last revision made on April 10th.

The exchange rate for customs duties had remained stable at N1,238 per dollar for an extended period, marking the longest duration it had maintained a specific rate in recent memory. The NCS, in collaboration with the Central Bank of Nigeria (CBN), regularly aligns the exchange rate for duties collection with the official market rate on the Nigerian Autonomous Foreign Exchange Market (NAFEM) window, leading to periodic adjustments.

Naira Strengthening Trend

The Nigerian naira has experienced significant strengthening over the past month, both in the official and parallel markets, driven by reforms initiated by the CBN. Measures such as selling USD to Bureau De Change (BDC) operators at N1,101 per dollar and implementing cash pooling for International Oil Companies (IOCs) to limit immediate FX repatriation have contributed to this trend.

As a result of these reforms, analysts at Goldman Sachs have predicted the naira to be one of the top-performing currencies globally. The President of the Association of Bureau De Change Operators (ABCON) noted in an interview that BDC operators were purchasing dollars at N980 per dollar, significantly lower than the official FX rate.

Decline in Foreign Exchange Reserves

Despite the positive developments in the FX market, concerns have been raised about the decline in Nigeria’s foreign exchange reserves, which dropped by over $2 billion in the past month. The reserves fell from $34.45 billion to $32.29 billion, reaching the lowest level in approximately six years.

However, the Governor of the CBN, Yemi Cardoso, clarified during the World Bank-IMF spring summit that the central bank’s objective is not to defend the naira but rather to fulfill external debt obligations, which contributed to the decline in foreign reserves.

The reduction in the exchange rate for import duty collection by the Nigeria Customs Service aligns with ongoing efforts to stabilize the FX market and support economic growth.