Emmanuel OchayiThe recent increase in the exchange rate for customs duty collection to N1,441.53 to the USD has sparked concerns among stakeholders, coming at a time when the naira is experiencing significant depreciation.
This new figure represents an increase of N61 from the previous rate of N1,373.64/$ at the beginning of the month.
According to Dr. Muda Yusuf, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), “The depreciation of the naira has the potential to undermine the efforts of the Central Bank of Nigeria (CBN) to stabilize the exchange rate and bring down inflation. The CBN needs to adopt a uniform rate to create certainty in the trade sector.”
The CPPE has urged the CBN to tame inflation and bring about stability to aid planning for businesses, recommending a rate of N1000/$ for import duties going forward.
The naira has seen significant depreciation in the past two weeks, having performed strongly in March when it was tagged the best-performing currency in the world by Goldman Sachs.
The naira opened the new month on a negative note, seeing a decline of 0.74% to N1,360/$ compared to the last trading day in April.
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Liquidity concerns have trailed the recent weakening of the naira, as the CBN last intervened in the FX market through dollar sales to Bureau De Change (BDCs) operators below the official market rate almost two weeks ago.
April was a relatively quiet month for the CBN, going by the flurry of reforms and policy updates seen in the first quarter of the year.
However, the depreciation of the naira has the potential to throw a spanner in the works of the CBN’s efforts to stabilize the exchange rate and bring down inflation.
As the CBN Governor, Yemi Cardoso, acknowledged that the elevated exchange rate has a pass-through effect on inflation.
The new FX rate for import duties is above the official market rate of the naira, which closed at N1,402.67/$ on the official market and N1,380 to the greenback on the parallel market on May 2, 2024.
The increase in the exchange rate for customs duty collection is expected to have implications for importers and the broader economy, as it may lead to increased costs and prices of goods.
