Pulse.com.gh logo

Foreign Exchange BoG announces new foreign exchange rules

Multiple-price auctions, the BoG said, would support market development, price formation and also to provide a transparent mechanism to intermediate FX proceeds from Cocoa Syndicated Loans to the market.

  • Published:
play Bank of Ghana
24/7 Live - Subscribe to the Pulse Newsletter!

The Bank of Ghana (BoG) has announced new regulations to govern the conduct of competitive multiple-price foreign exchange (FX) auction to allocate foreign exchange against the Ghana Cedi.

Multiple-price auctions, the BoG said, would support market development, price formation and also to provide a transparent mechanism to intermediate FX proceeds from Cocoa Syndicated Loans to the market.

The new regulation is to ensure a well-functioning foreign exchange market and to further develop the foreign exchange market within the financial system of Ghana.

Below are the new rules

1. Publication of Foreign Exchange Auction Calendar

The BOG will publish an auction calendar for the foreign exchange market on quarterly basis. The calendar will be published one week preceding the quarter on the Bank of Ghana website and on the BOG Page cpurl://ts.cp./Apps/Auctions on Reuters Terminal to enable market participants to adequately plan. The announcement shall list the date and time, auction volume target, settlement and other information. Annex I provides a sample auction announcement.

2. Eligibility

Participation in the auction is restricted only to the Authorized Foreign Exchange Dealing Banks.

3. Eligible Currency and Quotation Convention:

 a) The auctions shall be limited to purchase or sale of the United States Dollar (USD) against equivalent value in the national currency – Ghana Cedi (GHS). b) The quotation of rates for bids placed in the auction shall indicate the equivalent value in the national currency (Ghana Cedi/ GHS), expressed against one unit of the USD quoted up to 4 decimal places. Example of the rate quotation for bid is 3.9805

4. Auction Schedule and Frequency:

a) The FX auction shall be held fortnightly as per the announced quarterly calendar by the BOG on Wednesdays with settlement on T+2. In the event that a national holiday falls on Wednesday the auction will be held on the next business day.

5. Bidding Process:

a) Authorized Banks shall submit their bids via a secured BOG Page cpurl://ts.cp./Apps/Auctions on Reuters Terminal or through a designated email in the approved format provided by the BOG. Annex II of these regulations provides the format.

b) Each bank is permitted to submit a maximum of [3] bids in the auction, quoting their desired amount and at their freely determined exchange rate as per quotation convention.

c) The minimum bid size is US$500,000 and in multiples of US$250,000, and expressed in numbers. Maximum bid size of a single bid shall not exceed ten percent (10%) of the announced auction target. The cumulative volume of all bids from any single bank shall not exceed twenty percent (20%) of the announced target for the auction.

d) Bids with incomplete or missing information or submitted after deadline shall not be accepted.

e) Bids exceeding the maximum single bid amount or lower than the minimum bid amount shall not be accepted. BOG reserves the right to reject the bid placed at the lowest exchange rate in the case of a sell-auction and highest exchange rate in the case of a buy-auction if bids of any bank exceed the cumulative volume limit.

f) Each bid is final and is irrevocably binding on the bidding bank. Once a bid has been submitted, no request for changes will be entertained by the BOG.

6. Allocation Methodology

a) The multiple-price auctions would be fixed volume format; the auction cut-off rate would clear the target volume offered in the said auction, accepting bids on best price principle.

b) The amount rule would require that not less than 25 percent of the auction target is allocated.

c) The general principle followed would be that the amount accepted at the auction be kept close to the announced volume, probable variance of not more than ±10 percent of auction target.

d) The under-fulfillment of the auction is only if the bids are clearly out of the market or outside the ±2 percent price range of the previous trading session or if in case of weak demand; however, the rule 6 (b) would still be adhered.

7. Auction Committee

a) An auction committee comprising of BOG staff appointed by the Governor shall oversee the conduct of the auction and decide on the cut-off, guided by the allocation methodology in paragraph 6.

b) Only authorized BOG officials may be present at the time of the auction allocation process. Details of individual bids of banks will be kept confidential.

8. Communication of auction results to the market

a) FX Auction results will be published on the BOG’s Page cpurl://ts.cp./Apps/Auctions on the Reuters Terminal at 11.45am, on the day of the auction. b) Please see Annex III for the format of Auction Results

9. Confirmation and Settlement of Trade:

a) Unless otherwise announced, the settlement period for the auction shall be T+2. This is to alleviate liquidity planning for banks and to move the FX market to the international standard of spot settlement.

b) FX dealers of the successful banks shall call BOG Dealing Desk via the Reuters Dealing System to confirm and conclude trades for accepted bids to facilitate STP settlement.

10. Other Provisions

a) All the foreign exchange regulations will apply to foreign exchange funds acquired or sold at the auction.

b) In particular, the banks are reminded to comply strictly with the regulations in respect of foreign exchange exposure limits as prescribed by the BOG.

c) 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.

d) These regulations shall be reviewed as and when the BOG deems it necessary.

e) The Bank reserves the right to amend these rules from time to time based on experience and prevailing circumstances.

Do you ever witness news or have a story that should be featured on Pulse Ghana?
Submit your stories, pictures and videos to us now via WhatsApp: +233507713497, Social Media @pulseghana: #PulseEyewitness & DM or Email: eyewitness@pulse.com.gh.

Recommended Articles

Recommended Videos

Top Articles

1 Menzgold Ghana Don't deposit money with Menzgold – BoG cautions public againbullet
2 Economy Bawumia says 'cedi depreciation temporary': Adviser says it...bullet
3 Fuel Price Hikes Fuel prices to drop again this weekbullet
4 Cedi Debate Mahama lacks understanding in Economics – Dr Bawumiabullet
5 Menzgold Ghana Investment company closes down its Gold Vault Marketbullet
6 Salaries In 2018 Here are the dates public workers will be...bullet
7 Shirley Frimpong-Manso and Ken Attoh owe The Royal Bankbullet
8 Free Decoder Promo StarTimes launches most affordable...bullet
9 Ghana Cedi Mahama shades Bawumia over Cedi depreciationbullet
10 Star Phone Services One Smart Star opens its first...bullet

Top Videos

1 Bozoma Saint John 10 quotes from Uber top official, Bozoma, that will...bullet
2 Money Alert Meet Africa's richest womanbullet
3 New Discovery Ghana discovers new mineral, lithium in commercial...bullet
4 Dr Joseph Siaw Agyepong Nobody can collapse my company – JOSPONGbullet
5 Support Finance minister buys Kantanka carbullet
6 Forbes 2018 Africa's billionaires rich listbullet
7 Video We are determined to move Ghana beyond aid - Bawumiabullet
8 Plane Crash Starbow suspends operations following plane crashbullet
9 Tech 6 reasons you should buy an iPhone SE instead of...bullet
10 New Phone Nokia’s MWC 2018 Event in Under 10 Minutesbullet