The Central Bank of Nigeria (CBN) has announced the successful conclusion of a Retail Dutch Auction System, where it sold a total of $876.26m to 26 qualified banks that participated in the auction.
The CBN had on Tuesday, August 6, 2024, held a Retail Dutch Auction System, during which $876.26m was sold to participating banks with the primary objectives of increasing FX liquidity, easing demand pressure, and promoting price discovery in the market, all of which are in line with the apex bank’s core goals
The CBN made the disclosure in a statement posted on its website signed by Omolara Omofunde Duke, the director, financial markets department.
Commenting on the auction process, the director disclosed that a total of $1.18bn in bids were submitted by 32 authorized dealer banks. Of the total bids, $313.69m from six banks were deemed to be ineligible, leaving a net total of $876.26m to be allotted among the 26 remaining banks who met the qualifying criteria
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The CBN stated, “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$313.69m from six banks were disqualified.”
In response to the mounting unmet demand for foreign exchange among end users, the apex bank announced last week its decision to implement a Retail Dutch Auction System. This move is seen as a timely intervention that aims to alleviate the increasing pressure on the FX market, ultimately stabilising the naira’s exchange rate.
In the past months, the naira has traded within the N1,450 and N1,600 range. However, despite the currency’s recent volatility, the Central Bank of Nigeria set a cut-off rate of N1495/$ for the Retail Dutch Auction, providing a brief respite from the currency’s fluctuating exchange rate and creating a much-needed stability in the market.
