A new Foreign Exchange Operations Framework to promote transparency in the forex market has been introduced by the Bank of Ghana (BoG). According to the BoG, the new forex operations framework reflected its commitment to market confidence and macroeconomic stability.
“By clarifying our objectives and processes, we aim to strengthen resilience while preserving the flexibility of Ghana’s exchange rate regime,” the BoG said in a statement issued by the Communications Department in Accra on Wednesday and copied to The Ghanaian Times.
The BoG said the framework, approved by the board, reinforced its commitment to maintaining macroeconomic stability under its inflation-targeting mandate and a flexible exchange rate regime, where the exchange rate remains market-determined.
The statement said under the new framework, BoG’s forex operations would pursue three key objectives.
First, the BoG said it would support reserve accumulation to provide a buffer against external vulnerabilities. Second, it noted that the BoG would act to dampen excessive short-term volatility in the foreign exchange market, responding to disorderly conditions without undermining exchange rate flexibility. Third, the BoG will intermediate forex flows in a market-neutral manner, using inflows from sources such as the Gold Purchase Programme or other export surrender requirements, the statement outlined.
The statement further indicated that the BoG would channel forex inflows into the market in an orderly and transparent way without influencing the exchange rate trend.
“The framework emphasises a rule-based approach that allows exchange rates to be determined by market forces while limiting excessive short-term volatility — but not eliminating it. Forex interventions will follow a structured discretion-under-constraint approach, ensuring that interventions do not target a specific exchange rate level but rather address market failures, such as the absence of hedging solutions for tail risks,” the statement elaborated.
The BoG stated that reserve accumulation and intermediation objectives would be achieved through transparent and well-communicated operations. It also explained that forex operations would be conducted through competitive, variable-rate, and fixed-amount auctions.
“Transparency is a cornerstone of the new framework. Auction amounts will be announced in advance, and results will be published on the same day,” the statement mentioned.
Moreover, the BoG indicated that twice-weekly forex operations for flow intermediation would be pre-announced at the beginning of each month, while interventions to dampen excessive short-term volatility would be announced either on the same day or one day prior to execution.
“Additionally, BoG will publish aggregated monthly forex operations data, clearly distinguishing between operational objectives, within five business days after the end of each month on its website. This breakdown will help market participants and the public understand the intent behind BoG’s actions and strengthen transparency and accountability,” it underlined.
BY KINGSLEY ASARE
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