In a circular issued on February 14, 2024, the Central Bank of Nigeria (CBN) has revised the exchange rate for the payment of import duty and other charges on imported goods. The new rate is N1515.09 per US dollar, up from the previous rate of N1444.56 per US dollar. This represents a 4.88% increase in the exchange rate.
The circular, signed by the Director of Trade and Exchange Department of the CBN, stated that the adjustment was in line with the provisions of the Finance Act 2020, which empowers the CBN to determine the exchange rate for import duty purposes. The circular also stated that the new rate would take effect from February 15, 2024.
The implication of this adjustment is that importers of goods will have to pay more naira for their imports, which could lead to higher costs of production and inflationary pressures. The CBN said that the adjustment was necessary to reflect the market realities and to ensure uniformity of the exchange rate regime in the country.
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The CBN also urged all authorized dealers, service providers and stakeholders to ensure strict compliance with the new exchange rate and to report any violations to the CBN for appropriate sanctions.
The Nigerian currency, the naira, has fallen to a record low of N1,600 per US dollar on the parallel market, according to traders and analysts. This represents a 20% depreciation since the beginning of the year, when the naira was trading at around N1,300 per dollar.
The naira’s decline as been attributed to several factors, including the persistent dollar scarcity in the country, the low oil prices that have reduced Nigeria’s foreign exchange earnings, the impact of the coronavirus pandemic on trade and remittances, and the lack of confidence in the CBN’s policies and interventions. Some experts have also blamed the CBN’s decision to ban cryptocurrency trading in Nigeria, wh
The official exchange rate, which is controlled by the Central Bank of Nigeria (CBN), remains at N1516 per dollar, but the gap between the official and parallel rates has widened significantly, creating distortions and uncertainties in the economy.
The naira’s depreciation has sparked widespread concerns among Nigerians, who fear that it will lead to higher inflation, lower purchasing power, reduced savings and investments, and increased hardship for businesses and households. Some have called on the CBN to devalue the official rate to reflect the market realities and ease the pressure on the naira. Others have urged the government to implement structural reforms that will diversify the economy, boost productivity, attract foreign investment, and improve governance and transparency.
The CBN has maintained that it will continue to defend the naira and ensure exchange rate stability, using various measures such as increasing forex supply, restricting forex access for some imports, imposing sanctions on erring dealers and operators, and promoting local production and consumption. The CBN has also assured Nigerians that it has enough reserves to meet its forex obligations and that there is no need to panic or resort to speculation.
However, some analysts have expressed doubts about the sustainability and effectiveness of the CBN’s interventions, given the widening gap between the official and parallel rates and the persistent dollar shortage. They have warned that unless the CBN adopts a more flexible and market-driven exchange rate regime, the naira will continue to depreciate and lose its value as a store of wealth and a medium of exchange.