The Central Bank of Nigeria (CBN) recently conducted a significant auction of $876.26 million through the Retail Dutch Auction System (RDAS) in an effort to alleviate pressure on the naira and enhance foreign exchange liquidity.
This auction, held on August 6, 2024, was part of the CBN’s broader strategy to stabilize the naira amid rising demand for foreign exchange.
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The naira, which has been trading between N1,450 and N1,600 per dollar in recent months, appreciated to N1,596.52 per dollar following the auction, marking a marginal improvement. The auction process saw bids valued at $1.18 billion from 32 authorized dealers, with $313.69 million worth of bids disqualified.
The intervention by the CBN is seen as a short-term measure to boost liquidity, with experts noting the potential for positive impacts on the naira’s value.
However, concerns have been raised about the sustainability of such interventions given Nigeria’s low foreign reserves. Additionally, the need for strategic fiscal policies to complement these monetary measures was emphasized by financial experts to ensure long-term stability in the foreign exchange market.
