CBN Slashes Dollar-Rate For Importers As Nigeria’s FX Reserves Hit $37.05-Billion

CBN Slashes Dollar-Rate For Importers As Nigeria’s FX Reserves Hit $37.05-Billion

In response to the naira’s appreciation, the Central Bank of Nigeria (CBN) has adjusted foreign exchange rates to facilitate the clearance of goods at the ports. The CBN has reduced the Customs exchange rate for duty collection from N1,584 to N1,541. This adjustment comes as Nigeria’s external reserves have reached a 17-month high of $37.05 billion as of July 2024.

Exchange Rate Adjustment

The rate for import duties by the Nigeria Customs Service has dropped from N1,584 per dollar on July 22, 2024, to N1,541 as of July 24, 2024, according to data from the Customs trade portal. This reduction follows the naira’s appreciation to N1,500 per dollar on July 22, 2024, before it fell to N1,548.76 the next day. The recent appreciation of the naira is the highest since March, when the CBN intervened by selling dollars to Bureau de Change (BDC) operators.

Forex Market Dynamics

On July 23, 2024, the naira’s value fell amid CBN’s forex sales to BDC operators who were previously excluded. According to FMDQ Exchange data, the dollar’s spot rate ranged between N1,610 and N1,470. Despite this volatility, foreign exchange turnover increased to $280.92 million on July 23, 2024. Financial experts predict that the naira may stabilize around N1,500 by the year’s end if the CBN continues its market interventions.

Nigeria’s Growing FX Reserves

Nigeria’s foreign reserves have climbed to $37.05 billion, the highest level in 17 months, up from $34.19 billion in June. This growth is expected to bolster investor confidence. The CBN last reported reserves above $37 billion in February 2023. Governor Olayemi Cardoso noted that diaspora remittances surged to $2.34 billion in 2024, up from $1.8 billion in 2023, contributing to the increase in inflows.

Market Trends and Policy Changes

The CBN has observed convergence between official and parallel market exchange rates. Cardoso highlighted that fiscal policies have helped moderate food inflation and improved FX pass-through. Additionally, capital importation rose to $5.92 billion from January to May 2024, compared to $1.77 billion in 2023. The Monetary Policy Committee (MPC) has also increased the monetary policy rate (MPR) by 50 basis points to 26.75% in response to rising food and core inflation.

Current FX Rates

In the parallel market, the naira traded at N1,570 and N1,580 to the euro and pound, respectively. It also traded at N2,020 and N2,070 to the pound, and N1,650 and N1,700 to the euro.