CBN auctions $876m at N1,495/$1 to clear retail FX requests backlog

The Central Bank of Nigeria (CBN) received a total bid valued at $1.18 billion from 32 authorised banks in its revived retail Dutch Auction System (rDAS) but accepted a total bid valued at $876.26 million from 26 banks.

Bids valued at $313.69 million tendered by six banks were disqualified.

The decision is expected to increase liquidity in the coming days and reduce pressure on the local currency.

According to the result of the FX sale to end users by the apex bank on Tuesday, of the disqualified bids, four banks submitted their bids after the cut-off time, while two banks did not provide bids.

Director of the Financial Markets Department, Dr Omolara Omotunde Duke, said that all bids with Form Q and unverifiable Form A and Form M on the trade portal were disqualified.

She added: “In line with the objective of the CBN to boost FX liquidity to the market as well as promote price discovery, the Bank approved a cut-off rate of N1495/$ for the rDAS where bids valued at $876.26 million from 26 banks were qualified.

“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,” the bank said.
The statement explained that the CBN undertook the sale of foreign exchange to end users to reduce the demand pressure in the FX market and promote price discovery on Tuesday, August 06, 2024.

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.

The templates were all password protected with the passwords submitted to the CBN after the deadline for submitting 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 yesterday.

The successful bids will be settled today. The payment will likely reduce demand pressure and possible naira appreciation.