The Central Bank of Nigeria (CBN) has auctioned $876.26 million to end-users, marking a significant move to strengthen the ailing naira. The auction, conducted on August 6, 2024, aimed to enhance foreign exchange liquidity, alleviate demand pressure, and support price discovery. As a result, the naira appreciated against the US dollar, trading at N1,596.52/$ from N1,601/$ on Tuesday.
The CBN received a total bid valued at $1.18 billion from 32 authorized dealers, with 26 banks qualifying for the auction. The bank approved a cut-off rate of N1495/$ for the Retail Dutch Auction, and all end-user accounts will be funded with the naira equivalent of their bids by Wednesday, August 7, 2024.
Experts have commended the intervention, citing its potential to shore up the naira and reduce speculation. However, some have expressed concerns about the sustainability of the auction system, given the country’s low foreign reserves.
The impact of the policy was immediate, with the naira appreciating by 0.3% against the US dollar on Wednesday. The CBN’s move is seen as a step towards stabilizing the foreign exchange market and boosting investor confidence.
