The central bank’s actions in the foreign exchange market are to blame for the nearly 17% fall in Ghana’s reserves since the year’s commencement. These steps were taken to lessen the Ghanaian cedi’s devaluation in the face of difficult macroeconomic and fiscal conditions that were made worse by a growing dollar shortage.
The paper emphasizes that the Bank of Ghana won’t implement measures that divide the market into segments or introduce different exchange rates. With improvements in design to support price discovery, effective allocation, and the deepening of the FX market, it emphasizes that FX auctions will be harmonized and act as the main mechanism for supplying liquidity.
“We will work with Fund employees to accomplish these goals. To help the FX market develop, we will gradually eliminate the miners’ temporary FX surrender requirement to the central bank. According to the study, the government of Ghana will work with significant exporters to examine methods for boosting voluntary domiciliation of export revenues.
The Bank of Ghana has pledged to gradually reduce its FX interventions and abide by a gross FX intervention budget in line with reserve target levels in order to control exchange rate volatility efficiently. The central bank also reaffirmed its unwavering commitment to setting a limit on monthly gross foreign exchange sales and offering FX liquidity at going market rates.
As the situation returns to normal, Dr. Addison emphasized the significance of the FX market’s unification, saying: “We aim to achieve a unified FX market, as this will address the issue at hand.” The BoG’s objective of improving market transparency, efficiency, and price discovery, which supports economic growth and fosters investor confidence, is aligned with the unification of the FX market.