Eko Hot Blog reports that, in the nine months leading up to September 30th, 2023, the three tiers of government recorded a total income of N1.05 trillion from exchange rate gains deposited into the Federation Account.
This surge was prompted by a 71% depreciation of the naira during that period.reports that, in the nine months leading up to September 30th, 2023, the three tiers of government recorded a total income of N1.05 trillion from exchange rate gains deposited into the Federation Account.
This surge was prompted by a 71% depreciation of the naira during that 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.
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