The Central Bank of Nigeria (CBN) today announced a closure of its Retail Dutch Auction System (RDAS) and Wholesale Dutch Auction System (WDAS) windows with immediate effect.
An excerpt from its press release says; “The managed float exchange rate regime, which the Bank had adopted following the liberalization of the foreign exchange market, has for the most part been successful in ensuring exchange rate stability in line with its mandate.
In recent times however, with the sharp decline in global oil prices and the subsequent fall in the country’s foreign exchange earnings, the Bank has observed a widening margin between the rates in the interbank and rdas window, thus engendering undesirable practises sincluding roundtripping, speculative demand…by economic agents”
This recent announcement comes on the heel of the Naira’s crash in the international market even as the Central Bank struggles to defend the currency. There are also speculations that the Central Bank has plans to further devalue the Naira.