BoG gains plaudit for Foreign Exchange Forward auction; analyst says it’ll help stabilise prices at the pumps

Governor of the Bank of Ghana, Dr Ernest Addison

A Banking Consultant, Dr Theo Acheampong has lauded the Bank of Ghana (BoG) for announcing a Foreign Exchange Forward Auction limited to the 30day tenor on March 30, 2022.

Dr Acheampong said he and other banking experts have been calling for such this announcing over the period.

The BoG said while making the announcement that “In addition to the guidelines for Bulk Oil Distributing Companies (BDCs) FX Auctions, all Authorized Foreign Exchange Dealer Banks shall also comply with the provisions of the Code of Conduct for the Interbank Foreign Exchange market in Ghana.

“The Auction shall be held under the following conditions: Amount on offer is US$100.00 million (One hundred million US Dollars); Banks are to ensure that participation in the auction is limited to qualifying BDCs based on the following conditions: Evidence of a valid license to operate as issued by the NPA; Must be in good standing with the NPA (i.e. no regulatory encumbrances); Provide evidence of a contract indicating volumes and cost of the products including premiums or discounts applied, as well as payment due date.

Contracts must be valid for the current window between 1st and 15th April 2022.

Evidence of sales to Oil Marketing Companies within the last three months; BDCs are to deposit all sales proceeds into an escrow account with their bidding banks for the window in which they participate in an auction. This will be closely monitored.

“Banks are required to pass on FX won by BDCs at the winning bid rates with no spreads. Bank of Ghana reserves the sole right to auction allocation. All results announced are final.”

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In a Facebook post, Dr Acheampong said “The Bank of Ghana must be commended for acting on this policy proposal which some of us have been advocating for a while now. The Central Bank has decided to auction dollars to Bulk Oil Distributing Companies (BDCs) for petroleum product imports.

“This will go a long way to help stabilise prices at the pumps. The initial amount on offer is USD100 million. In the long term, we need to get our domestic refineries working!”

By Laud Nartey||Ghana