The Central Bank of Nigeria has disclosed that net foreign exchange flows into the country surged to $25.4 billion in the first six months of 2024, up 55% from the previous year.
It asserted that the visible progress is the outcome of its policy initiatives.
This new step comes after its $876 million auction to 26 banks to fulfil unmet FX requests.
The apex bank stated on Thursday that this expansion has been spurred by increased capital importation, which reached $6 billion in June 2024, as well as record inflows from diaspora remittances through legal channels.
The statement added, "The CBN’s policy objectives are producing real outcomes and increasing market confidence. Between January and June, net foreign exchange flows increased by 55% year on year, reaching $25.4 billion.
“This expansion has been fueled by an increase in capital imports, which reached $6 billion in June 2024, and record inflows from diaspora remittances via formal channels.”
The CBN also stated that about $305 million in foreign exchange has been sold to approved dealers in the last three weeks via a two-way quote mechanism, which has been used for several months to improve liquidity in the interbank market.
According to the release, the CBN offered $876 million to match customer bids received during an auction that ended on Wednesday, August 7, 2024.
This was accomplished using the Retail Dutch Auction System, which is intended to ease FX sales to end users directly, fostering a more transparent market, minimizing information asymmetry, and assisting with price discovery.
The statement read: "In the latest testament to the Central Bank of Nigeria’s ongoing commitment to support the proper functioning of the foreign exchange market by increasing liquidity when necessary, the apex bank offered $876 million to fulfil bids submitted by customers at an auction concluded on Wednesday, August 7, 2024.
"In keeping with its vow to guarantee transparent access to foreign exchange for all lawful consumers, the CBN’s leadership has implemented an extra mechanism, the Retail Dutch Auction System, to facilitate FX sales directly to end users.
“This method tries to make the market more transparent by minimizing information asymmetry and promoting price discovery. It supplements the two-way quote system implemented in recent months to improve liquidity in the interbank market, through which over $305 million of foreign exchange has been sold to authorized dealers in the last three weeks.”
The apex bank also stated that it generated less than 5% of the official market’s $43 billion foreign exchange turnover in July 2024.
According to the CBN, the FX market is showing signs of improvement and improved depth, with more strong and diverse sources of liquidity contributing to the continuing convergence of exchange rates across all market categories.
According to the release, the CBN offered $876 million to match customer bids received during an auction that ended on Wednesday, August 7, 2024.
This was accomplished using the Retail Dutch Auction System, which is intended to ease FX sales to end users directly, fostering a more transparent market, minimizing information asymmetry, and assisting with price discovery.
The statement read: "In the latest testament to the Central Bank of Nigeria’s ongoing commitment to support the proper functioning of the foreign exchange market by increasing liquidity when necessary, the apex bank offered $876 million to fulfil bids submitted by customers at an auction concluded on Wednesday, August 7, 2024.
"In keeping with its vow to guarantee transparent access to foreign exchange for all lawful consumers, the CBN’s leadership has implemented an extra mechanism, the Retail Dutch Auction System, to facilitate FX sales directly to end users.
“This method tries to make the market more transparent by minimizing information asymmetry and promoting price discovery. It supplements the two-way quote system implemented in recent months to improve liquidity in the interbank market, through which over $305 million of foreign exchange has been sold to authorized dealers in the last three weeks.”
The apex bank also stated that it generated less than 5% of the official market’s $43 billion foreign exchange turnover in July 2024.
According to the CBN, the FX market is showing signs of improvement and improved depth, with more strong and diverse sources of liquidity contributing to the continuing convergence of exchange rates across all market categories.
The statement said, “The foreign exchange market is also exhibiting signs of improvement and improved depth, with more strong and diverse sources of liquidity contributing to the sustained convergence of currency rates across all segments of the market.” By the end of July 2024, the official market had generated $43 billion in client transactions, with CBN-supplied liquidity accounting for less than 5% of total market activity."
The CBN also emphasized its commitment to creating a transparent, market-driven foreign exchange environment, and that it will continue to expand the market’s capacity to satisfy the demands of all legitimate participants.
Since taking office last year, Olayemi Cardoso has implemented several reforms to stabilize the foreign currency market and enhance productivity.
While government officials say that there have been significant changes, the lives of ordinary individuals have yet to improve due to rising inflation and the high cost of living.