CBN Uses $876m to Buy Naira at Dutch FX Auction

With the aim of promoting price discovery in the currency market, the Central Bank of Nigeria (CBN) conducted a Retail Dutch Auction System (RDAS) in US dollars to alleviate demand pressure in the FX market on Wednesday.

In a two-way FX transaction at the auction, FX users represented by local deposit money banks and other eligible authorised dealers were required to fund accounts with naira in exchange for US dollars.

According to the auction results, authorised dealers submitted bids totaling $1.18 billion, and the auction concluded with a cut-off rate of N1495/$ for qualified bids totaling $876.26 million.

The apex bank it asked authorised dealer banks to submit a comprehensive template that contains the details of the Forms A and M_ of all the outstanding trade backed unmet fx demand of their customers via email on Tuesday, August 06, 2024, between 9:00am and 3:00pm.

“The templates were all password protected with the passwords submitted to the CBN after the deadline for the submission of the bids, thereafter, the bids were 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.

The CBN said a total bid valued at US$1.18 billion was received from 32 Authorized Dealers Banks, of which, bids valued at US$876.26 million from 26 banks qualified, while bids valued at US$313.69 million from 6 (six) banks were disqualified.

Of the disqualified bids, four banks submitted their bids after the cutoff time of 3:00 pm, while 2 banks did not provide bids in the template submitted. All bids with Form Q, and unverifiable Form A and Form M on the Trade Portal were disqualified.

In line with the objective of the CBN to boost Fx liquidity in the market as well as promote price discovery, the bank approved a cut off rate of N1495/US$ for the retail Dutch auction, where bids valued at US$876.26 million from 26 banks qualified. #CBN Uses $876m to Buy Naira at Dutch FX Auction Lagos State Debt Spikes to N2.7 Trillion – Rating NoteThe post CBN Uses $876m to Buy Naira at Dutch FX Auction appeared first on MarketForces Africa.