Bank of Ghana to issue $80 million into forex market

The Bank of Ghana (BoG) is expected to issue a total of $80 million onto the forex market after it completed two FX forward auctions for this month.

The Bank of Ghana

The two auctions generated bids to the tune of $168.45 million but the BoG accepted only $80 million. In total, 71 bids were submitted but only 39 of the bids were accepted by the BoG.

The bids submitted were for the 7-day, 15-day, 30-day, and 45-day tenors.

For the 7-day bid, the central bank accepted a total of $26 million during the month. For the 15-day, 30-day and 45-day auctions a total of $29.25 million, $16.25 million and $6.5 million were accepted, respectively. Bids totaling $ 1.5 million and $ 0.5 million were accepted for the 60-day and 75-day tenured auctions during January 2020.

The volumes offered at the forward FX auctions for this first quarter of 2020 have been increased by 60 percent over the initial auction conducted in October 2019, to help contain the increased demand for those currencies within that period of the year.

This is to help narrow the gap between high demand and supply of FX to reduce the pressure that the relatively high demand for FX puts on the cedi in the first quarter.

Background

The first forward FX sales window which was from October to December 2019 saw the BoG sell a total of US$ 125 million.

The BoG sold US$ 50 million each month in the maiden quarter (except in December when US$ 25 million was sold).

However, the 2020 calendar indicates that BoG plans to issue US$ 80 million per month in the first three months of this year.

The calendar shows that the central bank, however, is maintaining the amount to be sold per month at US$ 50 million for the rest of the quarters – bringing the total target for 2020 to US$ 715 million, according to the year’s FX forward sales auction calendar.

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