In its most recent Retail Dutch Auction, the Central Bank of Nigeria (CBN) auctioned $876.26 million to 26 approved banks for N1,495/$1.
This is stated in a statement signed by the director of the financial markets department, Dr. Omolara Omotunde Duke.
The Central Bank of Nigeria (CBN) conducted a Retail Dutch Auction System (rDAS) auction on August 6, 2024, to reduce demand pressure in the foreign exchange market and promote price discovery.
A retail dutch auction system is a public offering auction structure in which the price of the offering is decided after taking in all bids and calculating the greatest price at which the complete offering may be sold. In this form of auction, investors submit a bid for the amount they are ready to buy in terms of quantity and price.
Authorized Dealer Banks were required to submit a template detailing outstanding trade-backed unmet Fx demand, which was password protected and then opened and collated.
“The accounts of all end users were to be funded with the naira equivalent of their bids by Wednesday, 07 August 2024. The settlement for the successful bids is T+2, that is, Thursday, August 08, 2024.”
A total of $1.18 billion in bids were received from 32 dealer banks, according to the CBN announcement. Six banks’ bids, however, were rejected since two of them failed to include a bid in their template submission and four of the banks missed the deadline.
To guarantee transparency of the process, the CBN announced that it will post the qualified bids as well as the total amount of bids made by banks on its website.
According to reports, on Tuesday, August 6, 2024, the forex turnover on the FMDQ, the official market where the exchange rate is traded, finished at a turnover of just $61.9 million, the lowest since January 8, 2024, of $59.6 million
In July, Nigeria’s central bank sold $377.17 million to approved foreign exchange traders to strengthen the naira. The latest FX auction, the biggest under CBN governor Yemi Cardoso, will award $20,000 to an eligible Bank of Commerce (BDC).
