Why CBN crashed dollar for importers to clear goods

• Following the appreciation of the Nigerian currency, the naira, the Central Bank of Nigeria (CBN) has adjusted FX rates to clear goods from the ports
• The CBN pegged the Customs exchange rates for duties collection at N1,541 from the N1,584
• The development follows the rise in Nigeria’s external reserves to a 17-month high of $37.05 billion in July 2024

Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment, and the economy for over a decade.

The exchange for import duties collections by the Nigeria Customs Service has crashed from N1,584 per dollar on Monday, July 22, 2024, to N1,541 as of July 24, 2024.

The development is according to information obtained from the Customs trade portal by Legit.ng.

Importers to pay less as CBN adjusts exchange to clear goods from the ports Credit: NCS
Source: Facebook

CBN crashes import duties by N45

The Central Bank of Nigeria reduced the import duties by N43 from the previous rates following the appreciation of the naira to N1,500 on Monday, July 22, 2024.

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After trading for N1,500 per dollar on Monday, July 22, 2023, the naira reversed its gains on Tuesday, July 23, 2024, to trade at N1,548.76.

Monday’s gain is the highest the naira has traded since March, when the Central Bank of Nigeria (CBN) intervened in the foreign exchange market by selling dollars to Bureau de Change (BDC) operators.

CBN sells dollars to BDCs

However, the naira’s crash on Tuesday comes amid Forex sales by the CBN to BDC operators who were sidelined in the first round of sales.

Data from the FMDQ Exchange shows that traders quoted the spot rate of the dollar at a high of N1,610 per dollar and a low of N1,470.

Foreign exchange turnover improved, rising to $280.92 million on Tuesday, July 23, 2024.

Experts predict new interest rates

Financial experts predicted that the naira might stabilize at N1,500 before year-end as the CBN pumps more FX into the markets.

Additionally, the naira also crashed in the parallel segment of the Forex market on Tuesday, July 23, 2024, trading at N1,580 from the N1,560 it traded on Monday, July 22, 2024.

Currency traders have applauded the apex bank for intervening in the FX markets and urged it to sustain the momentum to keep the local currency afloat.

Nigeria FX reserves record growth

Nigeria’s foreign reserves rose to a 17-month high of $37.05 billion in July 2024, a development experts say will boost investors’ confidence.

The CBN said the last time the country’s external reserves rose above $37 billion was in February 2023.

Rise FX reserve to boost investors’ confidence

The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, said the amount increased from $34.19 billion in June.

The CBN disclosed this after the two-day Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, July 23, 2024.

The MPC disclosed that the rise in external reserves would boost investors' confidence in a more stable foreign exchange rate, asking the apex bank to explore ways to improve inflows, primarily via diaspora remittances.

Cardoso stated that Diaspora remittances surged to $2.34 billion in 2024, compared to $1.8 billion in 2023, and that inflows increased to $38.88 billion from $37.93 billion in May 2024.

Official and black markets finally converge

The CBN boss said there had been convergence in FX rates between the official and parallel markets.

According to reports, Cardoso said the fiscal authority's policies have aided in moderating food inflation and that monetary policy has positively changed the FX pass-through.

Also, the MPC noted that capital importation rose to $5.92 billion between January and May 2024 from $1.77 billion in 2023.

The Monetary Policy Committee Meeting of the Central Bank of Nigeria (CBN) has increased the monetary policy rate (MPR) by 50 basis points from 26.25% to 26.75.

Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), said the continuous increase in interest rates was based on the rise in food and core inflation.

Naira trades at new rates against the pound, euro

Legit.ng earlier reported that the Nigerian currency, the naira, experienced a mixed performance in the foreign exchange market, with varying rates at the parallel and official markets.

According to Bureau de Change (BDC) operators in the parallel market, traders bought the euro and pound and sold at N1,570 and N1,580 to the dollar, respectively.

The naira also traded N2,020 and N2,070 to the pound and N1,650 and N1,700 to the euro.

Source: Legit.ng