Central Bank holds third forward forex auction, sells $30m to BDCs
The Central Bank of Ghana has held its third forward foreign exchange auction for 2023, providing $30 million in foreign exchange to Bulk Oil Distribution Companies (BDCs) at a rate of 11.9 pesewas per dollar.
The auction, which took place on Valentine’s Day [February 14, 2023] saw 30 BDCs submit bids ranging from GHS 10.55 to GHS 11.2.
The Central Bank projects a total of $200 million to be sold to BDCs during the first quarter of 2023.
Purpose of the Forward Forex Auction
The forward foreign exchange auction is intended to reduce uncertainty and promote price discovery in the downstream sector.
By offering a fixed amount of foreign exchange at a fixed rate, the Central Bank aims to stabilize the market and ensure consistency in the pricing of downstream products. This is expected to improve transparency and efficiency in the foreign exchange market.
New Format for Forex Auctions
The Central Bank’s new forward auction format represents a shift from the previous approach of selling foreign exchange at a single rate determined by supply and demand. This new approach is expected to bring increased transparency and efficiency to the foreign exchange market.
Further Auctions Planned
The Central Bank has announced a fourth auction worth $30 million to be held on February 24th, with subsequent auctions planned for March 14th, and March 29th, each worth $30 million.
This shift in the Central Bank’s foreign exchange policy aligns with its commitment to creating a more stable and predictable business environment in Ghana. It is also expected to have a positive impact on the country’s balance of payments and overall economic performance.
The Importance of the BDCs
BDCs play a critical role in Ghana’s downstream petroleum sector by importing, transporting, and distributing petroleum products across the country.
They are major stakeholders in the industry and play a key role in ensuring adequate supply of petroleum products to consumers.
Impact on the Economy
The Central Bank’s foreign exchange policy is expected to have a positive impact on the economy by creating a more stable and predictable business environment. This is expected to attract more foreign investment, increase economic growth and development, and create more jobs for Ghanaians.
Overall, the Central Bank’s commitment to promoting stability and transparency in the foreign exchange market is expected to bring numerous benefits to Ghana’s economy and its people
