CBN Increases the Exchange Rate for Paying Customs Duties by 11.1%

Yesterday, the Central Bank of Nigeria (CBN) increased the exchange rate for paying customs duties at the nation's seaports by 11.1% following the crash in the value of naira against the dollar in the FX market.

According to information from the Nigeria Customs Service's official trade portal, CBN increased the Customs FX duty rate from N1,150.16/$ to N1,329.94/$ on Thursday, April 25.

This hike indicates a rate increase of 11.1% over the previous opening Form M rate of N1,150.16/$ and an increase of N1,329.94/$ on the cost per dollar to clear goods at the port.

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It was also reported that the naira lost 12% of its value this week on the Nigeria Autonomous Foreign Exchange Market (NAFEM). At Thursday's official end of the market, it continued to weaken, closing at N1,309.88 to the dollar.

Over the last four days, the naira has declined by 12% to trade at N139.89 compared to its closing price of N1,169.99 last week. On Monday, it closed weaker at N1,234.49.

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This was despite a $510 million increase in turnover from $89 million. By Tuesday, the naira's value depreciated further to N1,300.15 to the dollar, with intraday trading seeing deals consummated between N1,317 and N1000, as reported.

At the end of Tuesday's trading, a turnover of $133.65 million had been recorded. The naira closed at N1,308.52 to the dollar on Wednesday, with trades done between N1,367 and N1,098 to the dollar, demonstrating the ongoing depreciation of value. Turnover in the market continued to rise, standing at $197.54 million.

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On Thursday, the naira was worth N1,309.88 to the dollar, a slight depreciation. While turnover increased significantly to $318.08 million, intraday deals were completed between N1,439 and N1,000.

Due to the ongoing supply shortage, traders point out that market forces caused the dollar's depreciation. On Monday, the Central Bank of Nigeria gave Bureau de Change operators dollars.

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It follows that, compared to importers who opened Form M earlier in the week, importers opening Form M today will need to pay more in import duties.

Back Story
As the naira continues its battle against the dollar, the Central Bank of Nigeria (CBN) adjusted the exchange rate for computing customs duties at the nation’s seaports. This has caused Apex Bank to change the exchange rate for the fifth time this year.

According to information obtained from the official trade portal of the Nigeria Customs Service, the exchange rate was reviewed upward on Wednesday morning, February 14, 2024, from N1 444.56/$ to N1 481.482/$.

This increase shows that importers of any commodity will pay more to clear their goods as import duties are benchmarked against the dollar.

The present review by the Central Bank of Nigeria (CBN) represents a 2.6% increase in the Customs duty rate and an increase of N36.922 per dollar compared to the previous rate of N1, 444.56/$.