The Bank of Ghana (BoG) has received $71.5 billion in bids from dealers, businesses and banks that participated in its third forex forward sale.
This means the Central Bank got more in bids than the $25 million that it was willing to sell in its forward forex sale.
Based on the auction results, 49 bids came from banks and dealers that were looking for $47 million from the Bank of Ghana in seven days.
However, the Bank of Ghana is prepared to sell $10.5 million within a range of GH¢5. 37 and GH¢5.38 by accepting 10 bids. 30 Bids came from dealers who were looking for $18.5 million in 15 days, but the regulator was prepared to sell $9 million at a price of not more than GH¢5.43.
Dealers and banks that wanted dollars in 30 days, submitted bids worth GH¢5 million at a price of GH¢5.42.
For this particular auction, the Bank of Ghana accepted all the bids in terms of price and the amount that they are looking for. The central bank also accepted all the bids coming from dealers that wanted $500, 000 in 45 days.
From the results, it was clear that there is more market players wanted more dollars, however, Bank of Ghana was able to supply a limited amount.
The next auction would be done on 26 November 2019 and December 10 2016. The Bank of Ghana is looking at selling $125 million at the end of the auction results by the end of this year.
Structure of the auction
The Bank of Ghana, the Foreign Exchange Forward rate Auction is limited to 7-day, 15-day, 30-day, 45-day, 60-day and 75-day tenors starting on October 01, 2019 to December 2019.
The Central Bank also said, in addition to the auction guidelines, all Authorized Foreign Exchange Dealer Banks shall also comply with the provisions of the Code of Conduct for the Interbank Foreign Exchange market in Ghana.
Bank of Ghana on the forward auction
Speaking to JoyBusiness, the Head of Financial Markets at the Bank of Ghana, Stephen Opata noted that the initiative would help businesses plan for their forex needs.
He said, “It creates more certainty for clients for future FX needs and alleviates unnecessary pressure on the spot FX market”.
Mr Opata indicated that it is another window to provide foreign exchange to bank clients based on verified commitments.
He added that this move is an ongoing reform to streamline operations of the foreign exchange market.
According to the Bank of Ghana, it would issue a one week notice, before the sale of these forexes, for businesses and commercial banks.
This would also allow businesses and banks to plan properly for their forex needs; a development that would help reduce pressure on the spot market.
Mr Opata added that after the first forward auction on October 1, the regulator plans to come out with a calendar for further sales.