The central bank in the coming weeks will fulfill its commitment to issue onto the forex market a total of US$ 50 million for forward delivery, following the completion of the FX forward auctions for April 2020.

So far, the Bank of Ghana has made a total commitment of US$ 275 million onto the Forex market for the first four months of 2020.

Bids submitted for the most recent auction on April 21, 2020 amounted to US$ 58.9 million, which was lower than the bids submitted in the previous auction during the month. However, the Bank accepted only US$ 25 million, which was the target for the auction.

The bids submitted were for the 7-day, 15-day, 30-day, 45 -day, 60-day and 75-day tenors. In total, 84 bids were submitted but only 36 of the bids were accepted by the BoG.

The central bank accepted a total of US$ 9 million for the 7-day bids. For the 15-day, 30-day and 45-day auctions a total of US$ 7.5 million, US$ 5 million and US$ 2.5 million were accepted, respectively. Bids totaling US$ 1 million were accepted for the 60-day auctions.

Background

During the first quarter of 2020, the volumes offered at each of the forward FX auctions was increased by 60 percent over the initial auction conducted in October 2019, to help contain the increased demand for those currencies at the start of the year.

The intent behind the front-loading of the auctions in the first quarter, a total of US$ 225 million, was to help narrow the gap between peak demand and supply of FX in order to reduce the pressure on the cedi exchange rate that relatively high demand for FX poses to the cedi in the first quarter.

Nevertheless, the calendar shows that the central bank will maintain 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.