The Foreign Exchange Auction System which was introduced by the Bank on 23 June 2020 has been successful in achieving price stability in the national economy.

The success has been achieved through market price discovery of the exchange rate and provision of a dependable foreign exchange market.

Since the inception of the Foreign Exchange Auction System, there has been a significant increase in both the number of bids and the value thereof from just under 100 bids valued at US$11 million at the first auction to the current levels of over 500 bids valued at around US$40 million at both the Main and SME auctions.

The top 100 beneficiaries of the Foreign Exchange Auction System over the past eight months, from 23 June 2020 to 28 February 2021, are listed hereunder for public information.

It is also important to note that the same entities have been the major beneficiaries of the interbank foreign exchange market during the same period.

One of the foreign exchange auction rules requires banks to ensure that applicants have enough local currency in their accounts to finance their bids.

However, it has come to the attention of the Bank that some banks are not paying particular attention to this requirement and have instead been extending overdraft facilities to finance their customers’ bids.

In line with the Bank’s monetary targeting framework designed to control the growth of money supply, funding of bids through overdrafts and advances is discouraged.

Where absolutely necessary, bank lending should be limited to a maximum of 50% of a bid. Under these exceptional circumstances, bidders would be required to have in their accounts a minimum balance equivalent to 50% to cover their bids.

Banks are further reminded to conduct full Know Your Customer (KYC) checks on their clients, and should not be complicit or connive in malpractices with their customers.

The Bank’s Exchange Control Division and the Financial Intelligence Unit (FIU) are continuously monitoring users of foreign exchange in the economy in order to deal with the malpractices.

This exercise has resulted in 12 entities being banned from participating in the foreign exchange auction whilst 62 entities are under the FIU watch list.

The banned entities’ respective bankers have been warned against breach of the foreign exchange auction rules.