High dollar demand sees BoG’s forex auction oversubscribed by 325%

High dollar demand sees BoG’s forex auction oversubscribed by 325%

The Bank of Ghana [BoG] in its forex forward rates auction on Tuesday, November 30, exceeded its target of raising $40 million.

The Central Bank at the end of Tuesday’s auction received bids totalling $170.2 million from banks and businesses for its forex although it was only expecting some $40 million in total bids for the greenback.

This therefore implies that the Central Bank by accepting the $40 million bids exceeded its auction target by 325 percentage points.

The BoG however, rejected bids to the tune of $130.2 million made by buyers.

The rejected $130.2 million bids was out of a total $170.2 million bids submitted by buyers.

The oversubscription of the Bank of Ghana’s (BoG) forex auction has been the trend for some weeks now as businesses are now in dire need of the dollar particularly for imports ahead of the Christmas festivities.

The Central Bank in its last forex auction on November 24, also had its dollar auction oversubscribed by 304.4 percentage points.

The BoG in last week’s forex auction rejected $121.75 million bids submitted by banks, importers, exporters and other persons and businesses that have need of the American dollar for their transactions.

The high demand for the dollar is expected to put pressure on the cedi and cause it to depreciate against the major trading currencies especially against the American dollar.

Presently, the cedi boasts a 2.6 percentage points year-to-date depreciation rate against the dollar.

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 $90.2 million of which the BoG accepted $21.75 million.

For the 15 day, 30 day and 45 day tenors, bids made totaled $55 million, $21 million and $4 million respectively.

The BoG, for the 15 day, 30 day and 45 day tenors accepted bids totaling $12 million, $4.75 million and $1.5 million respectively.

Source: norvanreports.com