CBN sells cheap dollars to Nigerians through 26 banks

• The Central Bank of Nigeria has announced the successful auction of over US$800 million to banks
• The CBN’s move is aimed at increasing foreign exchange liquidity and reducing demand pressure on the naira.
• Banks were invited to submit applications from customers; 26 banks were successful, six were disqualified and four others were late.

Legit.ng Journalist Dave Ibemere has over a decade of experience in business journalism and is well versed in the Nigerian economy, stock market and general market trends.

The Central Bank of Nigeria (CBN) on Wednesday, August 8, 2024, sold foreign exchange bids totaling US$876.26 million to end users whose foreign exchange bids were submitted by about 26 banks through the Retail Dutch Auction System.

This was disclosed by CBN in a statement published on its website and signed by Omolara Omofunde Duke, the Director, Financial Markets Department.

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The CBN announced plans to launch a Retail Dutch Auction System to meet the increasing unmet end-user demand for foreign exchange.

This move aims to reduce the growing pressure in the foreign exchange market and stabilize the exchange rate of the naira.

CBN sells dollars to banks

Giving an insight into the auction, Omofunde stated that the total bids from 32 authorized commercial banks reached a value of $1.18 billion.

However, bids from six banks worth $313.69 million were disqualified.

The reason for the disqualification was procedural errors: four banks had submitted their bids after the 3:00 p.m. deadline and two banks had failed to submit their bids in the required form.

The statement reads:

“A total bid value of $1.18 billion was received from 32 authorized dealer banks. Bids valued at $876.26 million from 26 banks were admitted, while bids valued at $313.69 million from six banks were disqualified.”

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The successful bids are scheduled to be processed on Thursday, August 8, 2024.

How the bids were placed

Punch reports that while the dollar was trading at over N1,600 in the official market, the central bank approved a floor rate of N1,495/$ at the Retail Dutch Auction.

This auction represents an important step in the CBN’s efforts to manage foreign exchange demand and maintain stability in the market.

CBN lets the dollar crash for importers

Legit.ng It was previously reported that the Central Bank of Nigeria (CBN) had reduced the exchange rates charged by the Nigerian Customs Service for cargo clearance at Nigerian ports.

The Central Bank fixed the tariff exchange rate at N1,600 from N1,610 per dollar, down from the N1,610 reported on Wednesday, July 31, 2024.

The development followed the steady rise of the naira against the US dollar in the official market.

Source: Legit.ng