rDAs: CBN sells $876.26m at N1,495/$
The Central Bank of Nigeria (CBN) has disclosed that it injected $876.26illion into the foreign exchange (FX) market through Retail Dutch Auction System (rDAs).
rDAS as the name implies is a direct sale of FX by the CBN through the banks to the end users of the FX. Unlike the wDAs, the rDAs is based solely on actual demand of FX by the end users of the FX.
The Director, Financial markets Department, CBN, Omolara Duke in a signed statement titled, “The result of the retail foreign exchange salles to end users through RDAs undertaken by CBN,” disclosed that apex bank approved a cut of rate of N1,495 against the dollar for the rDAs where bids valued at $876.26 million from 26 banks qualified.
“In line with the objective of the CBN to boost FX liquidity to the market as well as promote price discovery, the Bank approved a cut of rate of N1,495 against the dollar for the Retail Dutch Auction where bids valued at $876.26 million from 26 banks qualified,” the statement disclosed.
According to her, a total bid valued at $1.8bilion was received from 32 Authorised Dealers Banks of which bids valued at $876.26milion from 26 banks qualified, while bids valued at $313.69 million from six banks were disqualified.
“Of the disqualified bids, four banks submitted their bids after the cut off time of 3:00om, while two banks did not provide bids in the template submitted. All bides with Form Q and unverified Form A and Form M on the Trade Porta were disqualified,” Duke stated.
She noted that the CBN undertook the sale of FX to end users through a rDAs to reduce the demand pressure in the foreign exchange market and promote price discovery on Tuesday.
“Authorised dealer Banks were required to submit a comprehensive template that contains the details of the Forms A and M of all the outstanding trade backed unmet FX demand of their customers via email on Tuesday, August 06, 2024, between 9:00am and 3:00pm.
“The templates were all password protected with the passwords submitted to the CBN after the deadline for the submission of the bids, thereafter, the bids were opened and collated.
“The accounts of all end users were to be funded with the naira equivalent of their bids by Wednesday August 7, 2024. The settlement for the successful bids is T+2 that is Thursday August 08, 2024.”
She, however, explained that the exercise was to ensure the transparency of the process, stressing that the total bides submitted by banks and all qualified bides for payment would be published on the website of the CBN for the information of the general public.
