Bank of Ghana auctions $17 million in its maiden forward forex sale after being introduced on October 1

According to the BoG, it got more bids than the amount offered in its maiden sale of advance forex.

“$51.3 million in the form of bids came from businesses through our dealers and commercial banks. This was against some $50 million that the Bank of Ghana was willing to sell.”

The Head of financial markets at Bank of Ghana, Stephen Opata made the revelation while he spoke to Joy Business.

Details of the auction

The Bank of Ghana just accepted to sell almost $17 million. Most of the banks and dealers that participated in the bidding process were interested in forward deals that would be closed in 7 days and 15 days.

“For instance, 24 bids were interested in the 7 days Tenor. The banks and dealers were looking for $34.40 million from the Bank of Ghana between GH¢5.15 and GH¢5.39,” Mr Opata noted.

He, however, noted that the Bank of Ghana decided to sell just $12.5 million at a rate of GH¢5.35 to GH¢5.36.

For the 15 days Tenor, nine bids came in with $9.35 million tendered, but the regulator just accepted to give out $4.25 million.

The central bank did not accept any bid for its 30 days Tenor even though businesses requested for it.

The forward sale of forex

According to the Bank of Ghana, one of the reasons for introducing this initiative is to help businesses that need forex for transactions better plan.

Mr Opata noted that the initiative would “creates more certainty for clients for future FX needs and alleviates unnecessary pressure on the spot FX market.”

He further indicated that it is another window to provide foreign exchange to bank clients based on verified commitments.

The bank, hence, said it would issue a one-week notice, before the sale of these forexes for businesses and commercial banks.

Background

Bank of Ghana while issuing notice on guidelines issued to forex dealers recently noted that it will begin forex forward auctioning effective October 1, this year.

In the notice, the bank of Ghana said the initiative which comes on the back of improved liquidity on the market and would deepen the foreign Exchange Market.

Foreign exchange dealers currently make forex purchase through spot sales that is; a purchase made on a day and settlements done in two days.