The Central Bank of Nigeria (CBN) has sold $876.26 million at N1,495 for one dollar to 26 banks through a special auction.
Dr. Omolara Omotunde Duke, Director of the Financial Markets Department, signed a statement about this.
The statement said the auction was meant to lower the high demand for foreign money and find its true value.
The statement noted: “On Tuesday, August 6, 2024, the Central Bank of Nigeria (CBN) sold foreign money to buyers using a special system called Retail Dutch Auction (rDAS) to reduce the high demand for foreign money and find its true value.
“Authorized Dealer Banks had to send a special form showing details of their customers’ foreign exchange needs by email on Tuesday, August 6, 2024, between 9:00 am and 3:00 pm. These forms were password-protected, and the passwords were sent to CBN after the deadline. Then, the bids were opened and looked at.
“All end users’ accounts had to be funded with the Naira amount of their bids by Wednesday, August 7, 2024. The settlement for the winning bids was set for Thursday, August 8, 2024.”
32 banks asked for $1.18 billion at the auction
According to the CBN statement, 32 banks asked for a total of $1.18 billion. But six banks were disqualified – four were late, and two didn’t provide bids correctly.
The CBN supplied only about 75% of the requested amount.
The statement added: “We received $1.18 billion in bids from 32 banks. From this, only $876.26 million from 26 banks were approved. The disqualified bids totaled $313.69 million: four bids were late, and two were incomplete. Any bids with Form Q or unverifiable Forms A and M were disqualified.
“To increase the available foreign money and find its true value, the CBN set a rate of N1495 for one dollar for this auction where $876.26 million from 26 banks were approved.”
The CBN said it would publish the total and qualified bids on its website to keep the process transparent.
Key Points to Note
- The forex turnover at FMDQ, where the exchange rate is traded officially, was only $61.9 million on Tuesday, August 6, 2024. This is a very low amount since January 2024.
- This is the second-lowest daily turnover this year. The lowest was $59.6 million on January 8, 2024.
- Nigeria’s central bank sold at least $377.17 million to foreign exchange dealers in July.
- The bank announced $20,000 to be sold to each Bureau De Change (BDC) at N1,450 for one dollar.
- This auction is the largest so far under the leadership of Yemi Cardoso as the CBN governor.