August 03, (THEWILL) – The Central Bank of Nigeria (CBN) has announced plans to hold a Retail Dutch Auction System (RDAS), on August 7, 2024, to sell foreign exchange to end-users through authorised dealer banks.
In a circular, the CBN directed authorised dealer banks to provide a list of outstanding FX demands from end-users, including customer information and purpose of FX requirement.
Titled, “Notice of Retail Fx sale to end users through authorised dealer banks”, the circular stated that details should contain 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 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”, it added.
The move aims to address growing unmet FX demand from end-users, which has increased pressure on the FX market and affected the naira’s exchange rate. Analysts note that despite recent interventions, the naira has struggled on both official and parallel markets.
The CBN previously used RDAS and Wholesale Dutch Auction System (WDAS), between 2002 and 2015, but closed these windows in February 2015, due to undesirable practices such as round-tripping and speculative demand. The reintroduction of RDAS marks a new effort to tackle FX market pressures.
