The Central Bank of Nigeria (CBN) has injected $876 million into the foreign exchange (forex) markets following the conclusion of a customer bid auction on Wednesday.
This was announced in a statement by Mrs. Hakama Sidi-Ali, the CBN’s Acting Director of Corporate Communications.
According to Sidi-Ali, the move underscores the CBN’s ongoing commitment to bolstering forex market liquidity.
“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,” she stated.
Sidi-Ali explained that the introduction of the Retail Dutch Auction System (RDAS) is designed to directly facilitate forex sales to end users. “This approach aims to foster a more transparent market, reducing information asymmetry and supporting price discovery,” she added.
The RDAS complements the two-way quote system that has been deployed over the past few months to enhance liquidity in the interbank market. Sidi-Ali noted that over the last three weeks, more than $305 million in forex has been sold to authorized dealers through this system.
Sidi-Ali highlighted that the CBN’s policy measures are yielding positive results, with net forex flows rising to $25.4 billion between January and June, marking a 55% year-over-year increase.
“This growth has been driven by a rise in capital importation, which reached $6 billion in June, along with record inflows from diaspora remittances through formal channels,” she said.
The forex market, according to Sidi-Ali, is showing signs of improvement with increased depth and more robust, diversified sources of liquidity. This has contributed to the sustained convergence of exchange rates across all market segments.
“The official market recorded a turnover of $43 billion in customer transactions by the end of July, with CBN-supplied liquidity representing less than five percent of total market activities,” she said.
Sidi-Ali emphasized the CBN’s commitment to fostering a transparent, market-driven forex market, adding that the apex bank will continue to strengthen the market’s capacity to meet the needs of all legitimate participants