CBN Excludes Six Banks in Its New Retail FX Sales Scheme to End Users
On Tuesday, August 6, 2024, the Central Bank of Nigeria (CBN) conducted retail foreign exchange (FX) sales to end users through the Authorized Dealer Banks via the Retail Dutch Auction System (RDAS). This initiative followed an assessment of FX demand and supply in the Nigerian foreign exchange market, aimed at enhancing supply and encouraging price discovery.
The Retail Dutch Auction System Forex involves the sale of FX to end users through an auction system. It begins with a call for bid submissions, with all bids being collected and arranged from the highest to the lowest bid. The call for bids focused on the naira/US dollar (N/U$$) currency pair for unmet FX demand supported by verifiable Forms A and M only.
According to the CBN statement released in the week, “All bids were password protected and submitted through the dedicated email address provided by CBN between 09:00 a.m. and 3:00 p.m. Bids received after 3:00 p.m. were disqualified. Passwords for the bids were sent after the auction closed. The total bids received were valued at U$1,191,071,651.59.”
From the total of $1.18 billion bids submitted by thirty-two (32) banks, bids totaling $279.04million from six banks were excluded/disqualified for various reasons. The six banks affected included:
- United Bank for Africa (UBA) – $13.2m;
- First City Monument Bank (FCMB) – $178.65m;
- Stanbic IBTC – $57.86m;
- Wema Bank – $21.94m;
- SunTrust Bank – $7.38m; and
- Rand Bank – No amount (no bid submitted).
The statement, signed by Omolara Omotunde Duke (PhD), Director of the Financial Markets Department, indicates that the successful bids ranged from N1495.00/US$ to N1650.00/US$ across 26 banks. Six (6) banks were disqualified, with four (4) submitting their bids after the 6-hours submission period (9:00 am-3:00 pm). Additionally, two (2) banks did not provide bids in the supplied template.
The Central Bank of Nigeria (CBN) reiterated that “each end user will be allocated foreign exchange at the rate submitted by their bank. Retail FX sales to banks were settled on Thursday, August 8, 2024. Only funded accounts by that date are eligible.”
