Africa
…as exchange rate gains soar by 10,400% in 9mths
THE three tiers of government recorded N1.05 trillion in income from exchange rate gains into the Federation Account, in nine months to September 30th, 2023, triggered by the 71 per cent depreciation of the naira during the period.
This represents a 10,400 per cent increase when compared with the N10.35 billion income from exchange rate gains recorded in the corresponding period of 2022 when the naira recorded a marginal depreciation of 4.8 per cent.
Exchange rate gain income represents the difference between the prevailing exchange rate in the official forex market and the exchange rate assumption of the budget for the year.
The exchange rate assumption of the budget is used to convert foreign currency income into the federation account including crude oil exports, foreign aid and foreign loans.
Hence the Federation Account gets more naira value for foreign currency income when the prevailing exchange rate is higher than the budget exchange rate.
The approved Budget 2023 was based on an exchange rate of N435 per dollar. But during the nine months the naira depreciated by 71.3 per cent in the official forex market where the exchange rate rose to N769.26 per dollar on September 30th 2023 from N449.05 per dollar on December 31st 2022.
Consequently, the difference between the budget exchange rate and the prevailing exchange rate widened to N334.26 per dollar on September 30th 2023 from N14.05 per dollar on 31st December 2022.
As a result, the income from exchange rate gains into the Federation Account rose to N1.05 trillion during the nine months, representing a 10,400 per cent, Year-on-Year, increase from N10.35 billion in the corresponding period of 2022.
In the first quarter,Q1’23, exchange gains into the Federation Account rose to N144.84 billion from zero in the preceding quarter, Q4’22.
While exchange rate gains dropped by 51 per cent, quarter-on-quarter, QoQ to N70.64 billion, it however shot up in the third quarter, Q3’23 by 1,081 per cent QoQ to N834.37 billion reflecting the impact of the ….naira depreciation triggered by the forex market reforms introduced by the CBN on June 14, 2023.
However, the naira depreciation combined with the impact of fuel subsidy triggered reduction in the purchasing power of Nigerians, following steady rise in prices of goods and services, leading to an increase in the inflation rate to 28.92 per cent, the highest in 20 years. vanguard
A.
-January 24, 2024 @ 10:48 GMT|
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