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Bank of Ghana says it will begin forex forward auctioning effective October 1

The Bank of Ghana says it will begin forward sales purchases of forex in the country.

The Governor of the Bank of Ghana (BoG), Dr Ernest Addison

The sale will begin from October 1, this year.

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The BoG made the revelation while issuing notice on guidelines issued to forex dealers.

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.

Details of the forward forex sales

In addition to the auction guidelines, the central bank said that all Authorised Foreign Exchange Dealer banks “shall also comply with the provisions of the Code of Conduct for the Interbank Foreign Exchange market in Ghana.”

The auction shall be held under the following conditions:

Amount on offer is US$50 million (Fifty million US Dollars).

Maximum bid size of a single bid shall not exceed 10% of the announced auction target. The cumulative volume of all bids from any single bank shall not exceed 20% of the announced target for the auction.

Maximum bids submitted shall not exceed three (3) bids per authorised dealer bank.

Successful banks will be expected to provide the required Cedis on trade date in the case where they are buying a forward contract.

The allowable spread between the bid and offer for banks’ clients shall be 25 pips/0.0025 Cedis.

All bids shall be backed by customer demand and documentation shall be submitted to the Director, Financial Markets Department, Bank of Ghana, 24 hours after the release of the auction results.

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