CBN sells $876.26 million of its $1.18 billion offering to 26 banks at N1,495/$1 in the latest Dutch Retail Auction

Following the reintroduction of the Retail Dutch Auction and an effort to ease demand pressures in the foreign exchange (FX) market and promote price discovery, the Central Bank of Nigeria (CBN) has sold $876.26 million at N1,495/$1 to 26 qualified banks in its latest Retail Dutch Auction.
The amount came from a total of $1.18 billion in bids received from 32 dealer banks.

However, bids from six banks were disqualified, as four banks did not meet the deadline while two banks did not include the bid in the submitted template.

This amount represents about 75% of the total bid amount submitted by central banks at the last auction.

This development was announced in a statement signed by Dr Omolara Omotunde Duke, Director, Department of Financial Markets.

The statement read: “The Central Bank of Nigeria (CBN) conducted a sale of foreign exchange (Fx) to end users through the Retail Dutch Auction System (rDAS) to ease demand pressures in the Fx market and encourage price discovery on Tuesday, 06 August 2024.

“Authorized Dealer Banks are required to submit completed formats containing details of Forms A and M of all outstanding FX requests supported by trades from their clients via email on Tuesday, 06 August 2024, between 09:00 and 15:00. All formats are password protected with the password submitted to the CBN after the deadline for submission of bids, after which bids are opened and collected.

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“All end user accounts must be funded with an amount equal to their bid by Wednesday, August 07, 2024. Settlement for successful bids is on Thursday, August 08, 2024.”

The statement noted: “A total of US$1.18 billion worth of bids were received from 32 Authorized Dealers Banks, of which, bids worth US$876.26 million from 26 banks were qualified, while bids worth US$313.69 million from 6 (six) banks were disqualified. Out of the disqualified bids, 4 (four) banks submitted their bids after the 3:00 p.m. deadline, while 2 (two) banks did not submit bids in the format submitted. All bids with Form Q, and Form A and Form M that could not be verified on the Trading Portal were disqualified.

“In line with the Central Bank’s objective to enhance foreign exchange liquidity in the market and encourage price discovery, the Bank approved a cut-off exchange rate of N1495/US$ for the Dutch Retail Auction where bids worth US$876.26 million from 26 banks were qualified.”

The CBN noted that it will publish the total bids submitted by banks and qualified bids on its website to ensure transparency of the process.

By; Babajide Okeowo

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