The Central Bank of Nigeria (CBN) has announced a strategic initiative through a Retail Dutch Auction System (DAS) that will address the volatility in the forex market and growing demand for forex by end users.
In a circular by the CBN to banks over the weekend, the apex bank directed all authorised dealer banks to submit a comprehensive and legitimate list of outstanding FX demands from their end users.
This initiative, set to commence from August 7 is targeted at increasing demand pressure in the FX market and stabilising the exchange rate of the naira.
In a circular to banks, the CBN noted that it has noticed huge increase in unmet FX demands from end users with banks, which has exacerbated the pressure on the FX market and adversely impacted the naira’s exchange rate.
According to the directive, the accounts of prospective customers must be naira-backed to qualify for participation in the auction, ensuring immediate settlement upon confirmation of bid acceptance by the CBN,” the apex bank directed.
