The Central Bank of Nigeria (CBN) has injected $876 million into the foreign exchange (FX) market to enhance liquidity and transparency. This move supports the bank’s commitment to providing transparent access to foreign exchange for legitimate customers.
The CBN has introduced the Retail Dutch Auction System (RDAS) to facilitate FX sales directly to end users, aiming to foster a more transparent market and reduce information asymmetry. This system complements the two-way quote system deployed recently to enhance liquidity in the interbank market.
Over the past three weeks, more than $305 million of foreign exchange has been sold to authorized dealers through this mechanism. The CBN reports that net foreign exchange flows rose to $25.4 billion from January to June, marking a 55% increase from the previous year. This growth is attributed to increased capital importation and record inflows from diaspora remittances.
The foreign exchange market is showing signs of improvement, with increased liquidity and a more diverse range of sources. By the end of July, the official market recorded $43 billion in customer transactions, with CBN-supplied liquidity making up less than 5% of total market activities. The CBN remains committed to fostering a transparent, market-driven foreign exchange market and will continue to support its capacity to meet the needs of all legitimate participants.