The Central Bank of Nigeria (CBN) recently conducted an auction, distributing a total of $876.26 million to 26 qualified banks as part of the latest Retail Dutch Auction System.
This initiative by the apex bank is designed to boost foreign exchange liquidity, ease demand pressures, and aid price discovery in line with its strategic objectives.
The auction took place on Tuesday, August 6, 2024, and its details were released in a statement on the CBN’s website on Wednesday. The statement was signed by Omolara Omofunde Duke, the Director of the Financial Markets Department.
According to the director, the auction received bids totaling $1.18 billion from 32 authorized dealer banks. However, bids amounting to $313.69 million from six banks were disqualified.
The disqualification reasons varied: four banks submitted their bids past the 3:00 p.m. deadline, while two banks failed to provide bids using the required template.
The statement highlighted, “A total bid valued at US$1.18bn was received from 32 Authorized Dealers Banks, of which, bids valued at US$876.26m from 26 banks qualified, while bids valued at US$313.69m from six banks were disqualified.”
The CBN had previously announced its intention to use a Retail Dutch Auction System to address the increasing unmet foreign exchange demand from end-users. This move aims to reduce pressure in the FX market and stabilize the naira’s exchange rate.
In recent months, the naira has fluctuated between N1,450 and N1,600. For the Retail Dutch Auction, the CBN approved a cut-off rate of N1,495 per dollar.
