With a budgeted amount of $75million, the Bank of Ghana will commence the multiple-price foreign exchange (FX) forward auction for the first quarter of 2022 today.
The auction is the first of six to be held in the first quarter of 2022, with only authorised foreign exchange dealing banks allowed to participate.
This is consistent with the central bank’s goal of regularly strengthening the local currency against the most widely traded currencies, particularly the Dollar, as seen by the release of $450 million into the foreign exchange market in the first quarter.
The multiple price FX forward auctions are intended to aid price discovery, develop the FX market, and reduce uncertainty about the future availability of FX to fulfill the Bank’s clients’ needs.
The Bank of Ghana (BoG) in a statement signed by its Secretary, Sandra Thompson, announced the following dates: January 11, 2022, January 25, 2022; February 8, 2022; February 22, 2022; March 08, 2022, and March 22, 2022, with a suggested value of $75 million per auction.
Bids and guidelines
Bids in compliance with the Foreign Exchange Forward Auctions criteria would be invited in accordance with the stipulated format to purchase US dollars against Ghana cedis on each auction date, according to the statement.
It stated that bids “shall be received using the dedicated email, email@example.com,” and that bids would be accepted between 9:30 a.m. and 10:30 a.m. on the auction day, with results announced at 15:00 p.m. on the same day.
“The Bank of Ghana will publish an auction calendar for the Foreign Exchange Forward Auction on a quarterly basis. The calendar will be published one week preceding the next quarter on the Bank of Ghana’s website,” it added.
According to the guidelines, each bank was allowed to submit a maximum of three bids per tenor in the auction, quoting their desired amount and at their freely chosen exchange rate as per quotation convention.
The minimum bid amount is $500,000, which must be represented in multiples of US$250,000 and in numerals.
A single bid cannot be more than 10 percent of the announced auction aim.
“The cumulative volume of all bids from any single bank shall not exceed 20 per cent of the announced target for the auction,” the guideline stipulated.