CBN sells $29.5 million via auction, settles for N765/$1 band

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The Central Bank of Nigeria sold $29.5 million via an auction at the interbank window on Thursday the 22nd of June 2023.

Nairametric confirmed this via multiple sources with direct knowledge of the matter.

The forex was sold to 9 banks including First Bank, Ecobank, Access Bank, Standard Chartered, Wema Banj, FBN Merchant Bank, Coronation Bank, and Globus Bank. About four banks bought $5 million while one bought $2 million. The others got $2.5 million each.

According to the document seen by Nairametrics the banks bought at different prices in line with auction rules and processes.

The highest rate sold was at N770/$1 with about $5 million, while the lowest exchange rate was $760/$1 with about $9.5 million sold at the amount.

One source indicates this is the first time the apex bank will be intervening in the forex market via auction since the operational changes to its forex markets.

What this means: Central Bank intervention in the forex market confirms an earlier report from Nairametrcs that the new forex policy of the central bank was a managed float and not a fully free float exchange rate as earlier thought.

  • CBN Deputy Governor, Kingsley Obiora had stated “There is no country in the world, even the US, that has a completely free float,” suggesting the central bank was not going to sit idle and watch the exchange rate depreciate without control.
  • This suggests why the apex bank is providing liquidity in the forex market to cater to rising demand.
  • Nairametrics observed. the total turnover at the I&E window on Thursday, June 22nd was $204 million, the highest turnover since June 16th when it hit $311 million.

International Airlines adopt market price: Meanwhile, Nairametrics observed airlines have adopted a market-driven daily exchange rate for their ticket prices.

  • In a message seen by Nairametrics airlines quoted the closing exchange rate of N763/$ for Wednesday the official rate.
  • International airlines had earlier adjusted their ticket price from N663/$1 to N770/$1 in line with the new central bank policy on forex.

Meanwhile, the exchange rate at the parallel market closed at about N767/$1 on Thursday closing higher than the N770/$1 average price a day earlier.

 

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