The exchange rate utilized for calculating customs import duties and facilitating cargo clearance has marked its fifth consecutive decline within a span of two weeks, dropping from N1,612 per dollar on March 15th to N1,405.46 per dollar presently.
Detailed Progression:
Here’s a chronological breakdown of the recent rate fluctuations:
- March 15, 2024: N1,612 per dollar
- March 16, 2024: N1,593 per dollar
- March 19, 2024: N1,572 per dollar
- March 23, 2024: N1,448 per dollar
- March 27, 2024: N1,405 per dollar
These successive decreases highlight a consistent strengthening of the naira against other currencies, reflecting both in the parallel and official foreign exchange markets. Notably, over the past fortnight, the naira has showcased a significant improvement, surging from N1,615 per dollar on March 13th to N1,382 per dollar by March 26th.
Context and Recent Reforms:
The recent positive trajectory of the Nigerian Naira (NGN) can be attributed to strategic initiatives and reforms introduced by the Central Bank of Nigeria (CBN) to combat inflation and stabilize the foreign exchange (FX) market.
Last week, the CBN announced the successful clearance of over $4 billion backlog in foreign exchange forwards, benefitting both local and international businesses.
In addition to this, the CBN has implemented stringent measures, including restrictions on International Oil Companies (IOCs) from immediately transferring 50% of their foreign exchange earnings, with a mandatory 90-day waiting period for the remainder.
Moreover, commercial banks are now barred from allocating foreign exchange sales profits towards operational expenses and dividend payouts. Notably, the CBN has initiated the sale of dollars to Bureau de Change operators at a rate of N1,251 per dollar.
In its latest Monetary Policy Committee (MPC) meeting, the CBN announced a 200-basis point increase in interest rates, raising it from 22.75% to 24.75%. Mr. Yemi Cardoso, the committee’s chairman, emphasized that this adjustment is aimed at reigning in the current inflation rate, which stands at 31.7%, while also ensuring effective management of the foreign exchange market.
