Central Bank of Nigeria Sells Foreign Exchange to End Users through Retail Dutch Auction System

The Central Bank of Nigeria (CBN) has announced that it has sold foreign exchange (Fx) to end users through a Retail Dutch Auction System (rDAS). According to a statement by Omolara Duke, Director, Financial Markets Department of the apex bank, the move was taken on Tuesday to reduce demand pressure in the Fx market and promote price discovery.

Under the rDAS, authorised dealer banks were required to submit a comprehensive template containing the details of all outstanding Fx demand of their customers via email. The templates were all password protected, with the passwords submitted to the CBN after the deadline for the submission of bids.

A total of 32 authorised dealer banks submitted bids, valued at 1.18 billion dollars. After the bids were opened and collated, the accounts of all end users were funded with the Naira equivalent of their bids by Wednesday. The settlement for the successful bids is "T+2", which means Thursday.

The CBN approved a cut-off rate of N1,495 to one dollar for the rDAS, where bids valued at 876.26 million dollars from 26 banks qualified. The bank also disqualified bids valued at 313.69 million dollars from six banks, citing that four banks submitted their bids after the cut-off time, while two banks did not provide bids in the template submitted.

Additionally, the CBN disqualified bids with Form Q, and unverifiable Form A and Form M on the trade portal. The bank aims to boost Fx liquidity to the market and promote price discovery, and has published the total bids submitted by banks and all qualified bids for payment on its website for the information of the general public.

This move by the CBN is expected to improve the foreign exchange market in Nigeria, making it easier for individuals and businesses to access foreign currency.