Central Bank of Nigeria (CBN) has sold $876.26 million at N1,495/$1 to twenty-six qualified banks in its latest Retail Dutch Auction.
Gatekeepers News reports that this was revealed through a statement released by Apex Bank’s Director of Financial Markets Department, Dr Omolara Omotunde Duke.
CBN disclosed that the auction was done to reduce the demand pressure in foreign exchange (FX) market and promote price discovery.
The statement goes: “The Central Bank of Nigeria (CBN) undertook the sale of foreign exchange (Fx) to end users through a Retail Dutch Auction System (rDAS) to reduce the demand pressure in the Fx market and promote price discovery on Tuesday, August 06, 2024.”
“Authorised Dealer Banks were required to submit a comprehensive template that contains the details of Forms A and M of all the outstanding trade backed unmet Fx demand of their customers via email on Tuesday, August 06, 2024, between 9:00 am and 3:00 pm. The templates were all password protected with the passwords submitted to the CBN after the deadline for the submission of the bids, thereafter, the bids were opened and collated.”
“The accounts of all end users were to be funded with the naira equivalent of their bids by Wednesday, 07 August 2024. The settlement for the successful bids is T+2, that is, Thursday, August 08, 2024.”
CBN revealed that a total bid of $1.18 billion was received from thirty-two dealer banks. Bids from six banks were however disqualified, and four banks did not meet with deadline while two did not provide bids in their submitted templates.
The apex bank only supplied about 75% of total bid amount at the latest auction.
The statement added: “A total bid valued at US$1.18 billion was received from 32 Authorized Dealers Banks, of which, bids valued at US$876.26 million from 26 banks qualified, while bids valued at US$313.69 million from 6 (six) banks were disqualified. Of the disqualified bids, 4 (four) banks submitted their bids after the cut-off time of 3:00 pm, while 2 (two) banks did not provide bids in the template submitted. All bids with Form Q, and unverifiable Form A and Form M on the Trade Portal were disqualified.”
“In line with the objective of the CBN to boost Fx liquidity to the market as well as promote price discovery, the Bank approved a cut-off rate of N1495/US$ for the Retail Dutch Auction where bids valued at US$876.26 million from 26 banks qualified.”
The CBN further noted that it will publish total bids submitted by banks and qualified bids on its website to show transparency of the process.
