Demand for dollars has surged significantly as demonstrated by the $137 million bids by bankers and other financial institutions in the first Forex Forward Auction for the year 2021.
However, the Bank of Ghana has positioned itself well to meet the rising demand for the currency with adequate supply, which many importers are seeking to pay for goods after their stocks reduced due to the Christmas festivity in December 2020.
The high demand for the dollar confirms the perception that forex demand at this time of the year would be high, particularly with the inclusion of economic recovery and the surge in domestic money supply in the latter part of last year.
Analysts believe the forward market intervention has been critical to complement the spot market sale of dollars to keep the cedi stable.
They therefore applauded the Bank of Ghana for anticipating rightly the high dollar demand and deliberate large allotment of dollars than the corresponding quarter last year.
The first bid for the forward sale of dollars ranks among the highest since the Central Bank started the deliberate policy to sell dollars in 2019.
“Overall, I want to believe that all segments of the forex market would receive as much supply with policy decisions as is required to prevent a faster pace of GHS [cedi] depreciation”, Courage Kingsley Martey, Currency Analyst at Databank Research said.
It is believed that all segments of the forex market would receive as much supply as is required to prevent a faster pace of depreciation of the cedi.
The local currency has since the beginning of this year lost only about 0.12% in value to the dollar.
Indicative Forex Rate as of 13 January, 2020
The Central Bank is allotting almost $50 million per auction or sale of $50 million every two weeks to boost liquidity and deepen the foreign exchange market, according to its Auction Calendar for Forex Forward Auction.
This means a total of $300 million will be sold to banks and other businesses for onward transactions in the first quarter of this year.