Nigeria Customs Service-Adjusts To Foreign Exchange Rate For Tariffs And Duties (Details)

Nigeria Customs Service-Adjusts To Foreign Exchange Rate For Tariffs And Duties (Details)

The Nigeria Customs Service (NCS) has recently modified its foreign exchange (FX) rate for tariffs and duties to ₦1,480 per dollar, as observed on the federal government’s single-window trade portal.

This adjustment reflects a 3.28 percent decrease from the previous rate of ₦1,530/$ set on May 17. Notably, the NCS rate now slightly undercuts the official FX rate of ₦1,510/$ recorded at the close of trading on May 24.

Customs typically align their FX rates with those recommended by the Central Bank of Nigeria (CBN) for import duties, reflecting activities in the official FX market. As of today’s trade closure, the Nigerian currency has strengthened to ₦1,339.33/$.

On May 16, Muda Yusuf, the director-general of the Centre for the Promotion of Private Enterprise (CPPE), underscored the necessity for customs to establish a quarterly exchange rate ranging between ₦800/$ and ₦1000/$ for assessing import duties. Yusuf emphasized that ongoing FX fluctuations directly impact inflation and urged for the implementation of a stable exchange rate to mitigate the inflationary effects of rising trade costs.

Meanwhile, the Nigerian Naira experienced significant appreciation against the US dollar on Monday, closing at 1,339.33/$ in the official foreign exchange market. This marked a notable 9.68 percent increase from Friday’s rate of 1,482.81/$, according to data from the FMDQ, overseeing the Nigerian Autonomous Foreign Exchange Market.

However, in the parallel (black) market, the Naira faced a slight depreciation, trading at ₦1,520 to the dollar, down 1.32 percent from ₦1,500 on Friday. This disparity underscores the ongoing volatility in the forex markets, attributed by Central Bank of Nigeria (CBN) Governor Olayemi Cardoso to seasonal fluctuations.

Governor Cardoso, during a press briefing in Abuja last Tuesday, linked the market volatility to “seasonal demand and a freely functioning market system of demand and supply.”

Furthermore, Monday’s trading witnessed a substantial decrease in forex turnover, with daily figures plummeting by 67.50 percent to $180.80 million from $556.25 million on Friday, signaling reduced transaction volume in the market.

The latest data from the CBN also indicates a 42 percent year-over-year decline in foreign exchange demand for importation and other forex-related activities, contributing to an overall 41.9 percent reduction in sectoral forex allocation in 2023.