The Nigerian naira retraced steps in the foreign currency market on Thursday as traders awaited the Central Bank’s next retail Dutch auction.
The apex bank recently re-introduced the Retail Dutch Action mechanism, which it had previously abandoned, in order to ensure that foreign currency requests for qualified transactions are delivered to market participants who bid.
According to Bizwatch Nigeria, the last FX auction took place in early August 2024, and the central bank has not flooded the market with new US dollars since then.
The CBN stated in a statement that authorised dealer banks bid a total of $1.18 billion at the last auction. However, the top bank sold $876.26 million to 26 banks after others failed to follow the proper procedures.
Analysts said the CBN was willing to honour all the bids, saying that the $313.69 million FX request 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 auctions would probably be once 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 the US dollar skyrocketed.
The FX crisis in the Nigerian market has remained unsolved even with sizeable US dollar inflows into the economy. It still looks like nothing is coming in terms of FX receipts because demand always outstrips 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 a 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.
