- 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 demand for foreign exchange (FX) from end users, which is affecting the naira's stability.
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What to know about DAS
The CBN explains that the Retail Dutch Auction System involves the sale of FX through an auction system to end users.
It begins with a call for bids for an auction, where all bids are collated and arranged from the highest to the lowest.
The auction mechanism is based on the volume of FX available for sale, and it also provides forward guidance on the exchange rate to promote market stability.
The cutoff point of an auction is the lowest exchange rate that clears the offered volume.
The Dutch Auction System was introduced and used by the CBN in 1987, 1990, and from 2002 to 2006.
Breakdown of $876.26 million sale
Providing details of the sale, the CBN stated that 32 banks submitted $1.18 billion in bids. Bid rates range from N1495.00/US$ to N1650.00/US$ across 26 participating banks.
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However, bids totalling $279.04 million from six banks were disqualified for various reasons.
The six banks disqualified for late submissions are United Bank for Africa, First City Monument Bank, Stanbic, and Wema.
While SunTrust was disqualified for no-bid rates, and Rand was disqualified because no bids were received.
For the 26 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 isdeveloping a framework to guide the expected huge food imports that will soon begin.
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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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