CBN DUMPS 12-MONTH FOREX POLICY WITH $876M AUCTION
Key Points:
1. CBN Forex Auction:
- Amount Auctioned: $876.26 million.
- Participating Banks: 26 commercial banks.
- Objective: Strengthen the naira by improving foreign exchange liquidity.
2. Impact on Naira:
- Naira Appreciation: From N1,601 to N1,596.52 per USD.
- Auction Date: August 6, 2024.
- Cut-off Rate: N1,495/$ for the Retail Dutch Auction.
3. Auction Details:
- Total Bids Received: $1.18 billion from 32 banks.
- Qualified Bids: $876.26 million from 26 banks.
- Disqualified Bids: $313.69 million from six banks (due to late submission or incorrect forms).
4. Settlement:
- Funding Date for End-User Accounts: August 7, 2024.
- Settlement Date for Successful Bids: August 8, 2024.
5. Auction Process:
- Submission Window: August 6, 2024, between 9:00 am and 3:00 pm.
- Transparency: Details of bids and payments will be published on the CBN website.
6. Policy Rationale:
- Previous Forex Policy: CBN has moved away from a 12-month forex policy to address liquidity and demand pressures.
- Objective: Alleviate demand pressure and support price discovery.
7. Market Reactions:
- CEO Opinions:
- Charles Sanni: Sees the intervention as beneficial for liquidity but potentially unsustainable due to low reserves.
- Dr. Muda Yusuf: Supports the intervention as a positive step for reducing volatility and stabilizing the naira.
8. Market Data Post-Auction:
- Dollar Supply Increase: From $61.90 million to $93.92 million.
- Naira Trading Range: Between N1,520 and N1,628 per USD.
Additional Notes:
- Economic Impact: The auction aims to mitigate the adverse impact of seasonal demand and import pressures.
- Future Policy Considerations: The effectiveness and sustainability of the intervention depend on the CBN's reserve levels and strategic fiscal policies.
Key Points:
1. CBN Forex Auction:
- Amount Auctioned: $876.26 million.
- Participating Banks: 26 commercial banks.
- Objective: Strengthen the naira by improving foreign exchange liquidity.
2. Impact on Naira:
- Naira Appreciation: From N1,601 to N1,596.52 per USD.
- Auction Date: August 6, 2024.
- Cut-off Rate: N1,495/$ for the Retail Dutch Auction.
3. Auction Details:
- Total Bids Received: $1.18 billion from 32 banks.
- Qualified Bids: $876.26 million from 26 banks.
- Disqualified Bids: $313.69 million from six banks (due to late submission or incorrect forms).
4. Settlement:
- Funding Date for End-User Accounts: August 7, 2024.
- Settlement Date for Successful Bids: August 8, 2024.
5. Auction Process:
- Submission Window: August 6, 2024, between 9:00 am and 3:00 pm.
- Transparency: Details of bids and payments will be published on the CBN website.
6. Policy Rationale:
- Previous Forex Policy: CBN has moved away from a 12-month forex policy to address liquidity and demand pressures.
- Objective: Alleviate demand pressure and support price discovery.
7. Market Reactions:
- CEO Opinions:
- Charles Sanni: Sees the intervention as beneficial for liquidity but potentially unsustainable due to low reserves.
- Dr. Muda Yusuf: Supports the intervention as a positive step for reducing volatility and stabilizing the naira.
8. Market Data Post-Auction:
- Dollar Supply Increase: From $61.90 million to $93.92 million.
- Naira Trading Range: Between N1,520 and N1,628 per USD.
Additional Notes:
- Economic Impact: The auction aims to mitigate the adverse impact of seasonal demand and import pressures.
- Future Policy Considerations: The effectiveness and sustainability of the intervention depend on the CBN's reserve levels and strategic fiscal policies.