The currency rate for customs duty collection fell from N1516/$ to N1512/$ between July 5th and July 7th, 2024. This reflects a decrease in N4 when compared to the preceding rate.
The decrease in the exchange rate represents the dip in rates during the 4th and 5th of July 2024, when the official market rate fell from N1520/$ to N1509/$, according to Nairametrics.
The high FX rate for customs duty collection reflects the devaluation of the naira in both the official and unofficial markets. This occurs despite a very calm FX market in June.
In June, the FX market and the customs exchange rate were very stable, with the exchange rate ranging between N1,473 and N1,510 and closing at N1,505.30/$1, suggesting a 1.3% depreciation for the month.
Despite early volatility, this stability indicates that the CBN’s reforms and policy initiatives are beginning to calm the foreign exchange market.
In the first half of 2024, the CBN considerably hiked the Monetary Policy Rate (MPR) by a total 750 basis points to address growing inflation and attract foreign portfolio investors
This change had an immediate impact in the first quarter, as foreign portfolio investment increased to $2.07 billion, the largest quarterly total since Q1 2020. Additionally, overall capital imports for the quarter surged to $3.37 billion, the highest level since Q1 2020.
The CBN’s next Monetary Policy Committee (MPC) meeting is later this month, and it will determine whether to hold or continue the interest rate hike that marked the first quarter of the year.
Already, players in the business community have begun to protest about the high interest rate environment, claiming that it stifles growth and job creation.
Africa’s richest man, Aliko Dangote, claimed that with banks charging interest rates of up to 30%, no employment or economic growth would be produced.
He said, “Right now, at 30%, there is no way anybody can create jobs because we are stifling growth. So interest rate can remain at 30% but no growth will happen unless that interest rate comes down.”
