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- The CBN, led by Yemi Cardoso, conducted its first retail Dutch auction, selling over $800 million at an exchange rate of N1,450 per dollar
- The sale is part of the CBN's move to help the naira recover against the US dollar in the foreign exchange market
- New data from the CBN showed that 26 banks benefited from the auction, while six banks were disqualified
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Legit.ng journalist Dave Ibemere has over a decade of business journalism experience with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
The Central Bank of Nigeria (CBN) sold $876.26 million to Nigerians through the newly introduced Retail Dutch Auction System (DAS)
DAS move is part of the apex bank's plans to tackle the mounting unmet foreign exchange (FX) demand from end users to stabilise the naira's value.
Source: Getty Images
What to know about DAS
The Retail Dutch Auction System (DAS) is a method where the CBN sells foreign exchange (forex) directly to end users through banks.
In this system, the auctioneer (CBN) starts with a high price, gradually lowering it until a bid is placed.
The process is driven entirely by the actual demand for forex from end users. Authorized dealers (banks) can only bid for the amount of forex corresponding to the actual requests they have received.
For example, if a bank has received requests totalling $50,000 from its customers, it can only bid for that exact amount in the CBN auction.
Breakdown of $876.26 million sale
Providing details of the sale, the CBN stated that 32 banks submitted a total of $1.18 billion in bids.
However, bids totalling $279.04 million from six banks were disqualified for various reasons. The six banks that were disqualified for late submissions are United Bank for Africa, First City Monument Bank, Stanbic, and Wema.
Meanwhile, SunTrust was disqualified for no bid rates, and Rand was disqualified due to no bids being received.
For the banks that qualified, the 10 banks that received the highest amounts are:
- Zenith Bank: $267.86 million
- First Bank of Nigeria (FBN): $228.99 million
- Access Bank: $79.09 million
- Fidelity Bank: $43.62 million
- GTBank (GTB): $29.54 million
- Standard Chartered (Stanchart): $28.43 million
- TAJ Bank: $19.11 million
- Jaiz Bank: $16.71 million
- Sterling Bank: $14.4 million
- Union Bank: $13.27 million
The other 16 banks and how much was received can be found here.
Customs set to begin import waiver, set rules
Legit.ng earlier reported that the Ministry of Finance is developing a framework to guide the expected huge food imports that will soon begin.
The move is one strategy of the Nigerian government to ease the high cost of living across the country.
The framework will be ready next week, the Nigeria Customs Service Comptroller General, Adewale Adeniyi, said on Tuesday, August 6, 2024.
Source: Legit.ng
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