The Central Bank of Nigeria (CBN) is planning a new way to help people who need foreign money (like dollars). This new plan is called the Retail Dutch Auction System (DAS).
This new idea will start next Wednesday. The goal is to help reduce the pressure on the naira, which is Nigeria’s money. Right now, there’s a lot of demand for foreign money and the naira is struggling. Last Friday, it was worth 1,617.08 naira for 1 dollar.
CBN Tells Banks to List Who Needs Foreign Money
The CBN has told all banks to make a detailed list of everyone who needs foreign money. This list must be real and true.
The notice from CBN said: “We know there is a lot of demand for foreign money that is not being met. This is making things hard for the naira. So, banks must give us a list of all the people who need foreign money.”
This list must include things like the customer’s name, address, phone number, Bank Verification Number (BVN), account number, Tax Identification Number (TIN), type of transaction, forms used, and any letters of credit.
Banks must send this list by email to EMDEXDealers@cbn.gov.ng by Tuesday, August 6, 2024. Also, the customers’ accounts must have naira in them to join the auction. This way, they can pay right away if their bid is accepted.
The notice added: “The CBN will use the Retail Dutch Auction System (DAS) to handle the demand for certain transactions through dealers on Wednesday, August 7, 2024. So, banks must send the required information by email to EMDEXDealers@cbn.gov.ng by Tuesday, August 6, 2024. Customer accounts must have naira ready to participate in the auction for quick payment if the bid is accepted by the CBN.”
This new system should make it easier for people to get foreign money through banks and help the naira to be more stable.
What You Should Know
The Retail Dutch Auction System (DAS) is when the CBN sells foreign money directly to people through banks.
This system works based on how much foreign money people need. For example, if a bank gets requests for $1 million from its customers, it can only bid for that $1 million in the CBN auction.
In July, the CBN sold at least $377.17 million to banks to help with foreign money needs.
On July 18, 2024, the CBN approved the sale of $20,000 to each Bureau de Change (BDC) to help with small transactions. They sold these dollars at a rate of 1,450 naira for 1 dollar.
The CBN is working hard to make more foreign money available and keep the market steady.