Despite increased earnings from the unification of foreign exchange rates to government coffers, six ministries, departments, and agencies have budgeted N244m to cover foreign exchange losses.
This is according to a data from the proposed 2024 budget available on the website of the Budget Office of the Federation.
According to the Corporate Finance Institute, a foreign exchange gain or loss occurs when a company buys and/or sells goods and services in a foreign currency, and the currency fluctuates relative to its home currency.
In the 2024 budget, the highest allocation for forex losses was that of Police Formations and Commands, which budgeted N137.1m to cover foreign exchange losses.
It was followed by the National Centre for Control of Small Arms and Light Weapons, with an allocation of N75.98m.
There was also the National Intelligence Agency, which budgeted N26.32m to cover the foreign exchange loss.
Others are the National Counter Terrorism Centre with an allocation of N3.75m; the Nigerian Airforce with N1.26m; and the Ministry of Communications and Digital Economy, N454,198.
On June 14, 2023, the CBN directed Deposit Money Banks to remove the rate cap on the naira at the official Investors and Exporters’ Window of the foreign exchange market to enable its free float against the dollar and other global currencies.
This led to an immediate decline in the value of the naira. The local currency fell from 471/$ to 861.91/$ as of Friday at the Investors & Exporters FX window, according to data from the FMDQ Exchange.
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