By Niyi Jacobs
The Central Bank of Nigeria (CBN) has reaffirmed its commitment to supporting the foreign exchange market by providing liquidity when necessary. In the latest move, the CBN offered $876 million to meet customer bids at an auction on August 7, 2024.
To enhance transparency and access to foreign exchange, the CBN has introduced the Retail Dutch Auction System (RDAS), allowing direct sales to end-users. This new mechanism aims to reduce information asymmetry, support price discovery, and foster a more transparent market.
The CBN’s efforts have yielded positive results, with net foreign exchange flows rising to $25.4 billion between January and June, a 55% year-over-year increase. Capital importation reached $6 billion in June 2024, and diaspora remittances through formal channels have also seen record inflows.
The foreign exchange market is showing signs of improvement, with increased depth and diversified sources of liquidity contributing to the convergence of exchange rates. The official market recorded a turnover of $43 billion in customer transactions by the end of July 2024, with CBN-supplied liquidity representing less than 5% of total market activities.
The CBN remains committed to fostering a transparent, market-driven foreign exchange market and will continue to strengthen the market’s capacity to meet the needs of all legitimate participants.
TAGS: CBN, Foreign Exchange, Liquidity, RDAS, Transparency, Market Confidence.
