The Central Bank of Nigeria (CBN) has offered USD 876 million to satisfy bids made by customers at an auction that ended on August 7, 2024. This is the most recent example of the CBN’s continued commitment to support the proper operation of the foreign exchange market by enhancing liquidity when necessary.
As part of its commitment to give all eligible clients transparent access to foreign exchange, the Central Bank of Nigeria’s leadership has added a second method, the Retail Dutch Auction System (RDAS), to help with FX sales to end users.
This strategy seeks to assist in price discovery, lessen information asymmetry, and promote a more transparent market.
It is an addition to the two-way quote system that has been used in recent months to improve interbank market liquidity, allowing for the sale of over USD 305 million in foreign exchange to authorised dealers in the last three weeks.
According to a recent bank statement, the Central Bank of Nigeria’s policy goals are to support market confidence and produce observable outcomes.
Between January and June 2024, net foreign exchange flows increased by 55% year over year to USD 25.4 billion.
Record inflows of diaspora remittances through official channels and an increase in capital importation, which hit USD 6 billion in June 2024, have propelled this expansion.
There are also signs that things are getting better and more widespread in the foreign exchange market. This is because there are now more stable and diverse sources of liquidity that help keep currency rates from diverging across all market categories.
By the end of July 2024, the official market had registered a USD 43 billion turnover in client transactions, with fewer than 5% of overall market activities coming from CBN-supplied liquidity.
The CBN is unwavering in its dedication to supporting an open, competitive foreign exchange market and will keep enhancing the system’s ability to serve the interests of all eligible players.
Meanwhile, the Central Bank of Nigeria has also announced the reintroduction of several key economic reports, stating its commitment to transparency and accountability in the African nation’s economy.
These reports include the Purchasing Managers’ Index (PMI), Business Expectation Survey (BES), Inflation Expectation Report, and other critical macroeconomic indicators.
According to a recent statement by the Acting Director of Corporate Communications at CBN, Sidi Ali, the move is part of the CBN’s ongoing data enhancement initiative and is designed to provide stakeholders with timely and accurate insights into Nigeria’s economic performance.
The PMI, which evaluates the health of the manufacturing, services, and agricultural sectors, along with the business and household expectations reports, are essential tools for understanding any country’s economic climate.
“These reports offer valuable insights into the perceptions and outlooks within the business and household sectors, respectively. This initiative is part of the bank’s broader efforts to enhance transparency, promote informed decision-making, and support economic growth,” the statement stated.
The reports will be periodically released on the CBN’s official website, making them accessible to the public, policymakers, and the business community. Central Bank of Nigeria also encouraged economists, analysts, investors, the media, and the general public to utilise the reports to gain a deeper understanding of Nigeria’s economic dynamics to foster a more inclusive economic discourse.