Bank of Ghana auctioning $715 million in Forward Foreign Exchange Sales in 2020 to stabilise the cedi

The Bank of Ghana (BoG) has revealed that it is auctioning some $715 million in Forward Foreign Exchange Auctions for the year 2020.

The Bank of Ghana

According to the Bank of Ghana’s Foreign Exchange Forward Auction guidelines issued on September 23, 2019, the bids are invited as per the prescribed format to purchase or sell US dollar against Ghana cedi separately on each auction date.

The central bank said this in a press statement issued after the cedi depreciated by about 10.6 percent against the greenback compared to the 8.21 percent depreciation achieved last year.

The move to auction such an amount of US dollars is expected to help arrest, to some extent, the perennial depreciation of the cedi.

Per the schedule BoG will have the highest auction of 80 million dollars each in January, February and March 2020.

Background

The Bank of Ghana, in October, began a Foreign Exchange Forward Rate Auction limited to 7-day, 15-day, 30-day, 45-day, 60-day and 75-day tenors.

In addition to the auction guidelines, all Authorised Foreign Exchange Dealer Banks were to comply with the provisions of the Code of Conduct for the Interbank Foreign Exchange market in Ghana.

Since the introduction of Foreign Exchange Forward Rate Auction, it has been recording a significant oversubscription.

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