BoG Forex Auction: $102 million American Greenback bids rejected by the Central Bank

Some $102 million in bids made for the American Greenback in a forex auction by the Bank of Ghana (BoG) on Tuesday, October 19, has been rejected.

The rejected amount was out of a total $177 million bids submitted by banks, importers, exporters and other persons and businesses that have need of the American dollar for their transactions.

The Central Bank in rejecting the $102 million bids made only accepted $75 million out of the total bids made.

The bids were made for the 7 day, 15 day, 30 day and 45 day tenors.

Total bids submitted for the 7-day tenor amounted to $99.25 million, of which the BoG accepted $44.5 million.

For the 15 day, 30 day and 45 day tenors, bids made totalled $53.5 million, $20.25 million and $4.5 million respectively.

The BoG, for the 15 day, 30 day and 45 day tenors, accepted bids totalling $21.25 million, $7.75 million and $1.5 million respectively. No bids were made for the 60 day and 75 day tenors.

The Central Bank’s forex forward auction programme is to help govern the conduct of forex auctions on the interbank foreign exchange market, deepen the forex market and reduce uncertainty on the future availability of dollars to meet the forex need of importers and exporters.

Cedi expected to be relatively stable in Q4 2021

The cedi is expected by currency analysts to be relatively stable against the American Greenback in the last quarter of 2021.

The anticipation of a relatively stable cedi is despite the expected pressures on the local currency as a result of high demand for the dollar by businesses for imports ahead of the Christmas festivities.

The local currency in the third quarter of this year posted a modest deprecation rate of 1.8% to the dollar, lower than the 2.96% depreciation rate recorded during the same period in 2020.

The 1.8% depreciation is the best performance achieved since 1992.

Senior Economic Analyst at Databank Research, Courage Martey, speaking in an interview on the stability of the cedi in the fourth quarter said, the local currency is well anchored despite some anticipated shocks.

“As we head into the final quarter of 2021, we are quite assured of continued relative stability but with a depreciation that will occur at a controlled or modest pace because already, we have a strong reserve buffer in excess of five months of import cover.

And from October we should start to see the tranche disbursement of the $1.5 billion Cocoa Syndicated facility, which will strengthen the cedi for the rest of this year. So generally, we are very positive about the cedi.”

“We do not expect that this inflow [cocoa syndicated loan] will translate into appreciation in the fourth quarter of this year. However, we think it will likely mitigate any potential shocks on the currency,” he remarked.

Meanwhile, the cedi, out of the Continent’s top 15 currencies, has placed 9th after slipping from its previous position as the 8th best currency on the Continent.

In August, the cedi was ranked 8th among Africa’s top currencies, with a depreciation of 1.30% to the US dollar. This was after it had appreciated against the American Greenback in the first six months of this year.

The Namibian dollar however dislodged the local currency from the 8th position after an improved performance against the American currency in September 2021.

READ ALSO: BoG Commits US$525m To FX Forward Market

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