CBN lets dollar fall for importers as Nigeria’s FX reserves surge to new 17-month high

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

Pascal Oparada of Legit.ng has been writing about technology, energy, stocks, investments and the economy for over a decade.

The exchange rate for import duties collected by the Nigeria Customs Service has fallen from N1.584 per dollar on Monday, July 22, 2024 to N1.541 on July 24, 2024.

The development is based on information obtained from the customs trade portal by Legit.ng.

CBN slashes import duties by N45

The Central Bank of Nigeria has reduced import duty by N43 from the previous rates after the naira rose to N1,500 on Monday, July 22, 2024.

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

Monday’s rise is the highest the naira has reached since March, when the Central Bank of Nigeria (CBN) intervened in the currency market by selling dollars to bureaus of exchange (BDC).

CBN Sells Dollars to BDCs

However, the naira crash on Tuesday came 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 dollar spot rate at a high of N1,610 per dollar and a low of N1,470.

Foreign currency revenue increased to $280.92 million on Tuesday, July 23, 2024.

Experts predict new interest rates

Financial experts predicted that the naira could stabilize at N1,500 before the end of the year as the CBN pumps more currency into the markets.

Moreover, the naira also crashed on the parallel segment of the Forex market on Tuesday, July 23, 2024. The currency was trading at N1,580, compared to N1,560 on Monday, July 22, 2024.

Currency traders have praised the central bank for its intervention in the currency markets and have called on it to maintain momentum and prop up the local currency.

Nigerian foreign exchange reserves grow to record

Nigeria’s foreign reserves hit a 17-month high of $37.05 billion in July 2024, a figure that development experts say will boost investor confidence.

According to the CBN, the last time the country’s foreign reserves exceeded $37 billion was in February 2023.

Increase FX reserve to boost investor confidence

Central Bank of Nigeria (CBN) Governor Olayemi Cardoso said the amount rose from $34.19 billion in June.

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

The MPC said the rise in foreign reserves would boost investor confidence in a more stable exchange rate. It asked the central bank to explore ways to improve inflows, mainly through diaspora remittances.

Cardoso said diaspora remittances increased to $2.34 billion in 2024, compared to $1.8 billion in 2023, with inflows increasing to $38.88 billion from $37.93 billion in May 2024.

Official and black markets finally come together

The CBN chief said there was convergence in exchange rates between the official and parallel markets.

According to reports, the fiscal authority’s policies have helped moderate food inflation and monetary policy has positively influenced the pass-through of foreign exchange, Cardoso said.

The MPC also noted that capital imports increased to $5.92 billion between January and May 2024, from $1.77 billion in 2023.

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

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), said the continued rise in interest rates is a result of rising food and core inflation.

Naira trades at new rates against pound and euro

Legit.ng previously reported that the Nigerian currency, the naira, has been a mixed performer in the foreign exchange market, with rates fluctuating in the parallel and official markets.

According to the Bureau de Change (BDC) at the parallel market, traders bought euros and pounds and sold them at N1,570 and N1,580 per dollar respectively.

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

Source: Legit.ng