CBN reveals why it sold FX to authorised dealer banks

3 months ago 4

The Central Bank of Nigeria (CBN) again sold about $815.36 million out of the $1.19 billion FX exchange demanded by bank customers
The CBN said it undertook the sale to reduce the pile of FX demand to reduce the pressure on the naira
The development comes as the naira appreciated against the US dollar in the official market at N1,574.20

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Legit.ng’s Pascal Oparada has reported on tech, energy, stocks, investment and the economy for over a decade.

The Central Bank of Nigeria (CBN) has settled another $815.36 million out of the $1.19 billion foreign exchange demand by end users funded by 26 banks at N1,495 per dollar.

The CBN stated this in a statement containing the summary of its Retail Dutch Auction signed by its director of the Financial Markets Department, Omolara Omotunde Duke.

CBN sells dollars to authorised dealer banks

CBN sells dollar at N1,495 to banks

The statement disclosed that after the collation, the Committee of Governors of the CBN approved a cut-off bid of N1,495.00 per dollar with a total successful bid of $815,362,006.30.

The sale represents 6.95% below the $876 million sold to 26 banks on Wednesday, August 7, 2024.

According to reports, the range of successful bids was between N1,495 and N1,650 per dollar across 26 banks.

Six banks were reportedly disqualified, including four submitted after the stipulated six-hour submission period, 9:00 a.m. to 3:00 p.m. Also, two banks needed to provide bids using a suitable template.

CBN said:

“It is hereby emphasised that each end user is allocated foreign exchange at the rate submitted by their bank. The Central Bank of Nigeria settled the retail FX sales to banks on Thursday, August 08, 2024, at T+2. The CBN said that all Accounts not funded by August 08, 2024, do not qualify.”

CBN discloses reasons for the sale of FX

In a statement on Tuesday, August 6, 2024, the apex bank said it undertook retail foreign exchange sales to end users through authorised dealer banks after evaluating FX demand and supply in the Nigerian FX market to improve supply and promote price discovery.

CBN stated that the call for bids was in naira and US dollar currency pair for unmet FX demand backed by verified Forms A and M only.

The CBN said that all the bids were password protected, submitted via the dedicated email address provided by CBN between 9:00 a.m. and 3:00 p.m., and sent after the auction's closing.

The naira appreciates in the official markets

The development comes as the naira appreciated against the dollar in the official and black markets on Friday, August 10, 2024.

Data from the FMDQ Exchange shows that the naira appreciated N1,574.20 per dollar in the official market compared to the N1,593 it traded on Friday, August 10, 2024.

The naira traded at a high of N1,601 per dollar and a low of N1,520.

FX turnover in the official market rose by $127.5% at $323.11 million on Friday, August 10, 2024.

The naira also appreciated in the parallel market to N1,585 per dollar on Friday, August 10, 2024, from the N1,590 per dollar it traded on Thursday, August 9, 2024.

As of Thursday, August 9, 2024, the margin between the parallel and official markets increased by N10.8 per dollar from N3.52.