CBN offers $876m to forex market, pledges more liquidity support

The Central Bank of Nigeria (CBN) has offered $876 million to the foreign exchange (forex) market to fulfil bids submitted by customers.

This was disclosed via a statement issued by the CBN Acting Director of Corporate Communications Department, Hakama Sidi-Ali, on Wednesday, August 7, 2024.

Sidi-Ali noted that the bids were submitted by customers at an auction concluded on Wednesday.

The CBN spokesperson reiterated the commitment of the apex bank to supporting the forex market by enhancing liquidity when necessary.

She stated: “In line with its pledge to provide transparent access to foreign exchange for all legitimate customers, the CBN’s leadership has introduced an additional mechanism.

“This is through the Retail Dutch Auction System (RDAS) to directly facilitate forex sales to end users.

“This approach aims to foster a more transparent market, reducing information asymmetry and supporting price discovery.

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“It complements the two-way quote system deployed over the past few months to enhance liquidity in the interbank market.

“Through it, more than 305 million dollars of foreign exchange has been sold to authorised dealers in the last three weeks.”

Sidi-Ali noted that the CBN’s policy objectives were yielding tangible results and bolstering market confidence.

The CBN official said the net foreign exchange flows rose to $25.4 billion between January and June, marking a 55 per cent year-over-year increase.

She said this growth had been driven by a rise in capital importation, which reached $6 billion in June, and record inflows from diaspora remittances through formal channels.

She added: “The foreign exchange market is also showing signs of improvement and increased depth, with more robust and diversified sources of liquidity contributing to the sustained convergence of exchange rates across all segments of the market.

“The official market recorded a turnover of 43 billion dollars in customer transactions by the end of July, with CBN-supplied liquidity representing less than five per cent of total market activities.

“The CBN remains steadfast in its commitment to fostering a transparent, market-driven foreign exchange market.

“It will also continue to strengthen the market’s capacity to meet the needs of all legitimate participants.”

The Star