The Central Bank of Nigeria (CBN) announced a significant 55 per cent year-over-year increase in net foreign exchange flows, reaching $25.4 billion between January and June 2024.
This growth, driven by a rise in capital importation and record diaspora remittances, reflects the positive impact of recent CBN policy measures.
Capital importation surged to $6 billion in June 2024, and the CBN sold over $305 million in foreign exchange to authorized dealers in the last three weeks through a two-way quote system, enhancing liquidity in the interbank market.
In a statement on Wednesday, the CBN disclosed that it offered $876 million through the Retail Dutch Auction System (RDAS) to meet customer demand, aiming to create a more transparent and efficient forex market.
The statement noted: “The CBN’s policy objectives are yielding tangible results and bolstering market confidence. Net foreign exchange flows rose to $25.4 billion between January and June, marking a 55 per cent year-over-year increase. This growth has been driven by a rise in capital importation, which reached $6 billion in June 2024, and record inflows from diaspora remittances through formal channels.”
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The CBN further noted that over $305 million of foreign exchange has been sold to authorized dealers in the last three weeks through a two-way quote system, which has been deployed over the past few months to enhance liquidity in the interbank market.
The bank’s intervention accounted for less than 5 per cent of the $43 billion forex turnover in the official market as of July 2024, signaling increased market depth and a convergence of exchange rates across segments.
The CBN remains committed to fostering a transparent, market-driven forex environment to support economic stability in Nigeria.
The latest forex auction, which saw $876.26 million sold at N1,495/$1, is the largest under the leadership of CBN Governor Yemi Cardoso.
“This approach aims to foster a more transparent market, reducing information asymmetry and supporting price discovery. It complements the two-way quote system deployed over the past few months to enhance liquidity in the interbank market, through which over $305 million of foreign exchange has been sold to authorised dealers in the last three weeks.”
The CBN also stressed that it is committed to fostering a transparent, market-driven foreign exchange environment and will continue to strengthen the market’s capacity to meet the needs of all legitimate participants.
According to the statement from the CBN, a total bid of $1.18 billion was received from 32 dealer banks.
However, bids from six banks were disqualified, as four banks did not meet up with the deadline while two did not provide bids in their submitted templates.