The Central Bank of Nigeria has been warned by the World Bank against using forex auctions as a means of interfering in the foreign exchange market.

The World Bank stated that allowing market participants to trade FX with more flexibility across time would also contribute to deepening the FX market.

The World Bank further suggested that the commitment to exchange rate flexibility be consistently reaffirmed by implementing a thorough, methodical, and open framework for foreign exchange interventions.

The policy advisory issued by the World Bank was included in the Nigeria Development Update, offering recommendations to stabilise the naira against foreign currencies.

This occurred as the CBN auctioned $876.26m to end users via a retail Dutch auction, a major move away from its traditional sales of foreign exchange to Bureau De Change operators on August 26, 2024.

Zenith Bank, FirstBank and Access Bank were the top three banks to get FX from the Dutch auction.

Other banks in the top 10 included Fidelity Bank, Guaranty Trust Bank, Standard Chartered Bank, Taj Bank, Jaiz Bank, Sterling Bank and Union Bank.

This auction marked one of the most significant FX interventions by the CBN under the leadership of Governor Yemi Cardoso, who has been actively working to stabilise the naira and address the ongoing volatility in the FX market.