The Central Bank of Nigeria has auctioned $876.26m to end users whose bids were submitted by 26 commercial banks in the apex bank’s latest attempt to strengthen the ailing naira.
The policy impacted the foreign exchange market on Wednesday as the naira appreciated against the United States Dollar, trading at N1,596.52/$ from N1,601/$ it traded on Tuesday.
The auction process was conducted on August 6, 2024, to enhance foreign exchange liquidity in the market, alleviate demand pressure, and support price discovery in alignment with the apex bank’s objectives.
The CBN said this in a statement posted on its website on Wednesday and signed by the Director of the Financial Markets Department, Omolara Omofunde Duke.
The naira has traded within the range of N1,450 and N1,600 in recent months. However, the bank approved a cut-off rate of N1495/$ for the Retail Dutch Auction.
The statement read in part, “The Central Bank of Nigeria undertook the sale of foreign exchange to end users through a Retail Dutch Auction System to reduce the demand pressure in the FX market and promote price discovery on Tuesday, August 06, 2024.
The statement also added that “Authorised Dealer Banks were required to submit a comprehensive template that contains the details of Forms A and M of all the outstanding trade-backed unmet FX demand of their customers via email on Tuesday, August 06, 2024, between 9:00 am and 3:00 pm.
“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.”
It further stated, “To ensure the transparency of the process, the total bids submitted by banks and all qualified bids for payment will be published on the website of the Central Bank of Nigeria for the information of the general public.”
Last week, the CBN unveiled plans to implement a Retail Dutch Auction System to address the mounting unmet foreign exchange demand from end users.
It said the aim was to alleviate the growing pressure in the FX market and stabilize the naira’s exchange rate.
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