Ghana to Launch First Foreign Exchange Auction From Cocoa Loansby
Ghana will start its first foreign-exchange auction by inviting bids for the proceeds from the cocoa regulator’s syndicated loans as the West African country seeks to liberalize its currency markets.
“We will start with a rules-based market-driven auction,” Bank of Ghana Governor Abdul Nashiru Issahaku told reporters Monday in the capital, Accra. “Banks will come to the auction and bid for the proceeds.”
The auctions will start after the Ghana Cocoa Board raised dollar-denominated loans from international banks for paying farmers in the next harvest, which starts in October, Issahaku said.
Until now, the central bank bought the entire dollar loan from the cocoa regulator and lodged it as foreign reserves. The cocoa board is expected to agree a loan deal for as much as $2 billion on Sept. 21 after raising $1.8 billion last year. Ghana is the world’s largest cocoa producer after neighboring Ivory Coast.
The bank will not immediately auction all the money raised through the loans, Issahaku said, without elaborating on the amount that will be available.
“The market is not yet developed to take $1.8 billion,” he said.