The Central Bank of Nigeria (CBN) has announced that it will undertake a Retail Dutch Auction System (RDAS) on Wednesday, August 7, 2024, that will see it selling foreign exchange to end users through authorised dealer banks.
In a circular titled, “Notice of Retail Fx sale to end users through authorised dealer banks,” the CBN consequently directed authorised dealer banks to provide it with a “legitimate list of all outstanding fx demand by Fx users,” which should contain information, such as, the customer’s name, address, contact information- including email, telephone number and Bank Verification Number (BVN)-, account number, Tax Identification Number (TIN), purpose for which the Fx is required, Form A or Form M and Letter of Credit number.
The apex bank also directed all authorised dealers to provide it with the foregoing information on or before Tuesday, August 6, 2024.
The circular, however, stated, “The account of the prospective customer should be naira backed as a prerequisite to participate in the auction for immediate settlement upon confirmation of bid acceptance by the CBN.”
According to the CBN, it reintroduced the rDAS, having noticed, “growing unmet FX demand from end users with banks,” which it said, “has continued to increase the demand pressure in the FX market with adverse impact of the exchange rate of the naira.”
Analysts note that despite the CBN stepping up in its interventions in the FX market in recent weeks, the naira has been struggling on both the official and parallel markets.
Saturday Telegraph reports that the CBN adopted the rDAS the Wholesale Dutch Auction System (wDAS), and Interbank Rate System Regime between 2002 and 2015. The RDAS and WDAS entailed forex auctions twice a week, with the rDAS intervention being directly to the customers while the wDAS was to the banks to be sold to the customers.
However, in its bid to tackle the pressure on the naira, the CBN had in February 2015, announced the closure of the retail/wholesale Dutch Auction Systems, rDAS and wDAS.
