The central bank in the coming weeks is set to issue onto the forex market a total of US$ 80 million, following the completion of two FX forward auctions for this month.
Bids submitted over the two auctions undertaken during January 2020 amounted to US$ 168.45 million, but the Bank of Ghana accepted only US$ 80 million.
The bids submitted were for the 7-day, 15-day, 30-day, and 45 -day tenors. In total, 71 bids were submitted but only 39 of the bids were accepted by the BoG.
The central bank accepted a total of US$ 26 million for the 7-day bids during the month. For the 15-day, 30-day and 45-day auctions a total of 29.25 million, US$ 16.25 million and US$ 6.5 million were accepted, respectively. Bids totaling US$ 1.5 million and US$ 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.
The intent behind the front-loading of the auctions in this quarter is to help narrow the gap between peak demand and supply of FX in order to reduce the pressure that relatively high demand for FX poses to the cedi in the first quarter.
Background
In the first forward FX sales window from October to December 2019, the bank sold a total of US$ 125 million.
Although US$ 50 million was sold per month in that maiden quarter (except in December when US$ 25 million was sold), 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.