The Bank of Ghana (BoG) sold about $17 million in its maiden forward forex sale.
The BoG got more bids than the amount offered in its maiden sale of advance forex.
Based on the official results secured from the BoG, $51.3 million in the form of bids came from businesses through their dealers and commercial banks. This was against some $50 million that the Bank of Ghana was willing to sell.
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.
However, 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 day 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.
BoG’s expectation on this 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.
The Head of financial markets at Bank of Ghana, Stephen Opata told JoyBusiness the initiative would “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.
According to the Bank of Ghana, it would issue a one week notice, before the sale of these forexes for businesses and commercial banks.
The regulator also believes that the forward forex sale would 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.
Conditions for the forex sale from October 1
The Bank of Ghana maintains that the amount that would be on offer on that day would be $50 million.
However, the maximum single bid size shall not exceed ten per cent (10%) of the announced auction target. “The cumulative volume of all bids from any single bank shall not exceed twenty per cent (20%) of the announced target for the auction”.
BoG added that successful banks will be expected to provide the required cedis on trade date in the case where they are buying a forward contract.
It also stated that allowable spread between bid and offer for banks’ clients shall be 25 pips/0.0025 cedis.
The regulator also stated that 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.