From July 5th to July 7th, 2024, the exchange rate for customs duties went down from N1516/$ to N1512/$. That means it went down by N4.
This drop shows that the exchange rate was lower between July 4th and 5th, 2024. The official market rate went from N1520/$ to N1509/$ during that time.
The high exchange rate for customs duties means the naira is getting weaker both in official and parallel markets, even though it was stable in June.
In June, the exchange rates stayed between N1473/$ and N1510/$. The rate closed at N1505.30/$1, showing a slight drop of 1.3% for the month.
Despite earlier ups and downs, this stability suggests that the CBN’s new rules may help keep the market steady.
In the first half of 2024, the CBN raised the Monetary Policy Rate (MPR) by 750 basis points to fight inflation and attract foreign investors.
This change had a quick effect in the first quarter. Foreign investments rose to $2.07 billion, the highest since early 2020. Total capital imports for the quarter went up to $3.37 billion, also the highest since early 2020.
The CBN will have its next big meeting this month to decide whether to keep raising the interest rate or not.
Impact of High Interest Rates on Businesses
Business people are worried about the high interest rates. They say it makes it hard to grow and create jobs.
At the Manufacturers Association of Nigeria (MAN), Africa’s richest man, Aliko Dangote, said high costs mean no new jobs or economic growth can happen. Banks are charging up to 30% interest rates.
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.”
Dangote’s point is clear when we look at the rise in finance costs for major companies in Nigeria.
In the first quarter of the year, a review showed that finance costs for big consumer goods companies went up by 1,345% compared to the same time in 2023. Nestle Plc, for example, saw its borrowing costs rise from N3.74 billion in Q1, 2023 to N217.01 billion in Q1, 2024.