CBN prohibits forex sale at RDAS

The Central Bank of Nigeria (CB) has scrapped the sale of the United States dollars at its Retail Dutch Auction System (RDAS) and the Wholesale Dutch Auction (WDAS).

The CBN announced this in a statement titled, ‘Closure of the CBN RDAS/WDAS foreign exchange window’, signed by Ibrahim Mu’azu, director, corporate communications department.

It directed that henceforth, all demand for foreign exchange should be channelled to the interbank foreign exchange market.

CBN informed all authorised dealers and the general public that it would continue to intervene in the interbank foreign exchange market to meet genuine and legitimate demands.

“The managed float exchange rate regime, which the bank had adopted following the liberalisation of the foreign exchange market, has for the most part been successful in ensuring exchange rate stability in line with its mandate,” it said.

“In recent times, however, with the sharp decline in global oil prices and the resultant fall in the country’s foreign exchange earnings, the
bank has observed a widening margin between the rates in the interbank and the RDAS window, thus engendering undesirable practices including round-tripping, speculative demand, rent-seeking, spurious demand, and inefficient use of scarce foreign exchange resources by economic agents.”

This, it explained, had continued to put pressure on the nation’s foreign exchange reserves with no visible economic benefits to the productive sector of the economy and the general public.

“In view of the foregoing, it has become imperative that appropriate actions be taken to avert the emergence of a multiple exchange rate
regime and preserve the country’s foreign exchange reserves.

“Consequently, we wish to inform all authorized dealers and the general public that, with effect from the date of this press release, the
RDAS/WDAS foreign exchange window at the CBN is hereby closed.

“Henceforth, all demand for foreign exchange should be channelled to the interbank foreign exchange market. For the avoidance of doubt, all authorised dealers and the general public should note that the CBN will continue to intervene in the interbank foreign exchange market to meet genuine/legitimate demands.”