Ghana’s delicate foreign exchange market is once again under scrutiny, as concerns mount over what many analysts describe as excessive intervention by the Bank of Ghana, a practice that could drain reserves and jeopardise the country’s IMF-supported economic recovery.
Ghana currently operates a managed flexible exchange rate regime, allowing the cedi to trade within an upper and lower bound set by the central bank. When the currency breaches those limits, the Bank steps in to stabilise the market. Through its gold purchase programme, the Bank has strengthened its reserve position in both gold and US dollars to support such interventions.
However, the scale and frequency of these interventions are now drawing criticism. Excessive intervention, experts argue, erodes the country’s reserves, fuels balance of payments deficits, and creates distortions in the foreign exchange market.
The widening gap between official and parallel market rates, Professor Domfeh notes, is a clear symptom of imbalance. “When multiple exchange rates emerge and the differentials become significant, it signals that confidence in the official rate is breaking down,” he explains. “Market players then seek alternative channels for foreign exchange transactions, undermining transparency and stability.”
He cautions that even if the Bank of Ghana possesses the reserves to act, such interventions must remain within the framework of the IMF programme and its agreed performance targets. The IMF reviews Ghana’s progress before releasing each tranche of funding, and any policy missteps could delay those disbursements and dent investor confidence.
“The central bank must strike a balance,” Professor Domfeh emphasised. “Intervention should ensure stability — not compromise credibility. Overreach could undo the gains made under the IMF programme and threaten the cedi’s fragile recovery.”
As of press time, the Bank of Ghana had yet to respond to questions regarding the scale of its recent market interventions.
