Bank of Ghana Auctions $40 Million in Foreign Exchange to BDCs
The Central Bank of Ghana has held its first forward foreign exchange auction of the year, making $40 million available to Bulk Oil Distribution Companies (BDCs) at a rate of GHS 10.51 pesewas per dollar.
The auction, which was held on Tuesday, January 17, saw 23 BDCs submit bids ranging from GHS 9.02 to GHS 11.00.
This is the first of several auctions scheduled for the first quarter of 2023, with a total of $200 million projected to be sold to BDCs during this period.
The rate is significantly lower than the $420 million auctioned in the fourth quarter of 2022, indicating a decrease of $220 million in the Central Bank’s forex forward auction to BDCs.
The purpose of the forward auction is to minimize uncertainty and aid price discovery in the downstream sector.
By providing a fixed amount of foreign exchange at a fixed rate, the Central Bank aims to stabilize the market and promote stability in the pricing of downstream products.
The forward auction format is a departure from the Central Bank’s previous approach, which involved selling foreign exchange at a single rate determined by supply and demand.
The new format is expected to increase transparency and improve the efficiency of the foreign exchange market.
The Central Bank has also announced a second auction worth $40 million, to be held on January 30, with subsequent auctions scheduled for February 14, February 24, March 14, and March 29, each worth $30 million.
This shift in the Central Bank’s foreign exchange policy is in line with the bank’s commitment to creating a more stable and predictable environment for businesses operating in Ghana.
It is also expected to have a positive impact on the country’s balance of payments and overall economic performance.
