For the first quarter of 2020, the Bank of Ghana has committed a total of US$ 225 million onto the forex forward market, following the completion of the sixth FX forward auction for the year.
Bids submitted during the auctions in this quarter amounted to US$ 453.04 million, of which the BoG accepted only US$ 225 million. The accepted bids represent 31.5 percent of the total targeted.
The bids were for the 7-day, 15-day, 30-day, and 45 -day tenors as well as the 60-day and 75-day tenors.
In total, 473 bids were submitted but only 260 of the bids were accepted by the central bank. The demand for forex was highest in March, 2020, as a total of 194 bids were submitted, representing about 41 percent of all bids for the quarter.
The volumes offered at the forward FX auctions for this first quarter of 2020 have been increased by 60 percent over the initial auctions during the last quarter of 2019 to help contain the increased demand for those currencies within this 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 planned to issue US$ 80 million per month in the first three months of this year. But for the first auction held in the month of February, the Bank accepted only US$ 25 million, well below its target.
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.