- Central Bank Sells GH¢19.53bn in 14-Day Bills at 10.5% Across Two October Auctions
The Bank of Ghana sold a combined GH¢19.53bn in 14-day securities through two auctions held within three days, underscoring the scale of its operations to manage short-term liquidity in the banking system.
Results of Tender 882 show that the central bank sold GH¢10.524bn in bills on October 5, followed by GH¢9.008bn on October 7.
The amount sold in the second operation was GH¢1.516bn lower, representing a decline of approximately 14.4 per cent.
Despite the change in volume, yields remained almost unchanged.
The effective annual interest rate increased marginally from 10.4972 per cent on October 5 to 10.4987 per cent on October 7, a movement of just 0.0015 percentage points, or 0.15 basis points.
The weighted-average discount rate similarly rose from 10.4550 per cent to 10.4565 per cent.
| Indicator | October 5 | October 7 | Change |
| Instrument | 14-day BoG bill | 14-day BoG bill | Unchanged |
| Amount sold | GH¢10.524bn | GH¢9.008bn | Down GH¢1.516bn |
| Percentage change | — | -14.4% | Decline |
| Bid-rate range | 10.4000%-10.4578% | 10.4000%-10.4578% | Unchanged |
| Allotted interest-rate range | 10.4418%-10.5000% | 10.4418%-10.5000% | Unchanged |
| Weighted discount rate | 10.4550% | 10.4565% | Up 0.15 basis points |
| Effective interest rate | 10.4972% | 10.4987% | Up 0.15 basis points |
| Combined amount sold | GH¢19.531bn |
Both auctions involved 14-day Bank of Ghana bills, but the securities carried different International Securities Identification Numbers.
The October 5 instrument carried ISIN GHCBAGH01504, while the October 7 issue was identified as GHCBAGH01520.
These were therefore separate securities rather than the reopening of a single instrument.
The identical bid ranges and nearly identical weighted-average rates indicate that the two operations were conducted under broadly similar pricing conditions.
On October 5, submitted and fully allotted discount bids ranged from 10.4 per cent to 10.4578 per cent. Their interest-rate equivalents ranged from 10.4418 per cent to 10.5 per cent.
The October 7 auction recorded precisely the same ranges.
The stability suggests the central bank maintained a firm pricing corridor even as the amount sold changed.
However, neither result discloses the total value of bids submitted, an announced auction target or rejected bids. An oversubscription or acceptance ratio therefore cannot be calculated from the notices.
The figures represent the amounts sold, not total demand from participating institutions.
The GH¢1.52bn reduction between the two auctions should not automatically be interpreted as weaker investor interest.
Because the Bank of Ghana determines how much liquidity it wishes to withdraw, a lower amount sold may reflect a change in the central bank’s assessment of banking-sector liquidity rather than a decline in demand.
It may also reflect the timing of other cash movements, including government transactions, previous security maturities, foreign-exchange operations and flows through commercial banks’ settlement accounts.
A complete assessment would require information on the value of bills maturing, bids submitted and other liquidity injections or withdrawals during the period.
The two auction results nevertheless show that substantial surplus funds remained available for placement in short-term central-bank instruments.
Banks and other eligible counterparties accepted returns of about 10.5 per cent for securities lasting only two weeks. Such bills allow institutions to invest temporary cash balances in a low-credit-risk asset without committing funds for a prolonged period.
The combined GH¢19.53bn sold across the two auctions represents the gross value of securities issued, not necessarily the net amount withdrawn from the financial system.
If older BoG bills matured during the same period, their repayment would have returned liquidity to banks. Part or all of the new issuance may therefore have replaced maturing securities.
The net sterilisation effect can only be determined after subtracting maturities and accounting for other central-bank operations.
Even with that qualification, the gross volume demonstrates the size of the BoG’s short-term liquidity-management activity.
At the applicable yields, the approximate simple interest cost of the October 5 issue over 14 days is GH¢42.36m. The October 7 issue carries an estimated interest cost of GH¢36.27m.
Together, the two operations could cost the central bank approximately GH¢78.63m over their respective 14-day tenors, subject to the precise pricing and settlement calculations applied.
That cost represents the price of temporarily withdrawing liquidity that could otherwise circulate through the banking system.
The auctions come after the Monetary Policy Committee kept the policy rate at 14 per cent for a third consecutive meeting.
The effective BoG bill yields of about 10.5 per cent remain roughly 350 basis points below the policy rate and only modestly above the interbank rate of about 10.2 per cent.
This gap indicates that short-term market conditions remain easier than the headline policy rate alone would suggest.
By issuing its own bills, the central bank can remove surplus funds and help strengthen the transmission of monetary policy into interbank and other short-term rates.
Liquidity absorption could also reduce the quantity of cedis available to finance foreign-exchange purchases at a time when the domestic currency has weakened to approximately GH¢11.83 against the dollar.
The relationship is indirect, since exchange-rate pressure also reflects petroleum imports, commercial payments, export proceeds and central-bank dollar supply.
But containing excess cedi liquidity can reduce one source of potential foreign-exchange demand.
The most important conclusion from the October 5 and October 7 results is that volume changed considerably while price barely moved.
The amount sold declined by 14.4 per cent, but the effective yield increased by only 0.15 basis points. Bid and allotment ranges were identical.
This suggests that the central bank was able to conduct two large liquidity operations without materially adjusting the return offered to participating institutions.
The next results will help establish whether GH¢9bn-GH¢10.5bn has become the central bank’s prevailing auction range or whether the two operations responded to temporary liquidity conditions.
For now, the BoG has placed GH¢19.53bn in separate two-week securities within three days a substantial gross intervention in Ghana’s short-term money market.
