Naira Retraces Ahead of Next Dutch FX Auction
The Nigerian naira retraced steps in the foreign exchange market on Thursday as market awaits next retail Dutch auction of the Central Bank.
The apex bank recently re-introduce Retail Dutch Action system the authority had abandoned as it seeks to ensure foreign currency demands for eligible transactions are deliver to market participants that submitted bids.
MarketForces Africa noted that the last FX auction was conducted early in August, 2024 and since then, the apex bank has not flooded the market with additional US dollar.
At the last auction, a total bid of $1.18 billion was received from authorised dealer banks, the CBN said in a statement. However, the apex bank sold $876.26 million to 26 banks as others failed to follow required process.
Analysts said the CBN was willing to honour all the bids, saying that $313.69 million FX requested disqualified from six banks would have been satisfied.
“As it is, the CBN is unlikely to conduct another Dutch auction as the month is already out of numbers. This suggests that retail auction would probably be once in a month”, an investment banker told MarketForces Africa, requesting not to be mentioned.
In the foreign exchange market, the Naira strengthened against the greenback, trading at ₦1,593.93 per US dollar in the official market, a 0.79% gain from the previous close.
The local currency exchange rate crossed N1606 per greenback in the official window yesterday as demand for US dollar skyrocketed.
FX crisis in Nigerian market has remained unsolved even with sizeable US dollar inflows into the economy. It’s still look like nothing is coming in terms of FX receipts because demand always outstrip the supply side, creating disequilibrium in the currency market.
In the parallel market, the naira was flattish over the day to settle at ₦1,605 per dollar. The informal currency market was relatively quiet today, according to channel check conducted by MarketForces Africa’s reporters across major states.
In the global commodity market, Brent crude rose by 2.02% to $80.24 per barrel, and West Texas Intermediate (WTI) crude increased by 2.25% to $76.19 per barrel on Thursday.
The rebound in oil prices was driven primarily by robust economic data from the U.S. and ongoing supply disruptions in Libya. #Naira Retraces Ahead of Next Dutch FX Auction
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