CBN auctions $876.26m at N1,495/$1 to 26 banks to reduce pressure on naira

By Matthew Denis, Abuja and Seun Ibiyemi

The Central Bank of Nigeria (CBN) has auctioned $876.26 million to 26 banks in the country.

The move is aimed at reducing the pressure of foreign exchange on the naira.

In a statement issued by the Director of the Financial Markets Department at CBN, Omolara Duke, the Apex Bank sold $876.26 million during its latest Retail Dutch Auction System (RDAS).

The foreign exchange was sold at a cut-off rate of N1,495 per dollar compared to the official rate of N1,600/dollar which the dollar was selling for prior.

According to the CBN, “a total of US$1.18 billion in bids were received from 32 authorised dealer banks.”

However, only 26 banks successfully met the requirements and deadlines, resulting in the approval of bids valued at $876.26 million. However, six banks were disqualified for failing to meet the stipulated conditions.

“The Bank approved a cut-off rate of N1495/US$ for the Retail Dutch Auction where bids valued at US$876.26 million from 26 banks qualified. While bids valued at US$313.69 million from 6 (six) banks were disqualified,” the statement read.

The disqualification reasons varied. Four banks were disqualified for submitting their bids after the cut-off time of 3:00 pm. Additionally, two banks did not submit their bids in the correct format.

The CBN also emphasised that all bids associated with Form Q, as well as unverifiable Form A and Form M on the Trade Portal, were disqualified.

This auction marks another step in the CBN’s ongoing efforts to manage foreign exchange liquidity and ensure the stability of the naira.

The Retail Dutch Auction System is a key mechanism used by the CBN to allocate foreign exchange to end users and to manage the supply and demand dynamics in the market.