Pressure on Cedi: BDCs request $70.1m, but BoG provides only $20m

The Bank of Ghana (BoG) has successfully auctioned $20 million to Bulk Oil Distribution Companies (BDCs) at an exchange rate of GH¢15.6062 to $1.
This represents a 0.8% appreciation in the exchange rate from the previous auction on August 13, where $20 million was sold at GH¢15.7311 to $1.

Remaining $50.1m
The auction held on August 28, 2024, saw strong demand with 10 bids submitted, totaling a substantial amount.
Despite the successful auction, BDCs still need to mobilize the remaining $50.1 million to meet their total forex needs, adding pressure to the struggling Cedi.

Bid details and forward contract
Bids for the auction ranged from GH¢15.2000 to GH¢15.7600 per dollar, reflecting the high demand for US dollars among BDCs. The transaction was executed as a forward contract, with settlement scheduled for 30 days from the auction date.

Limited impact on foreign exchange needs
The $20 million provided by BoG constitutes less than 10% of the total monthly foreign exchange requirements for fuel imports into the country.
Recent auctions have been held at rates closely aligned with the retail forex rate, helping to minimize opportunities for arbitrage.