The Board of the Bank of Ghana (BoG) has approved a new Foreign Exchange (FX) Operations Framework aimed at clarifying the objectives, principles, and procedures that guide the central bank’s FX activities.
According to the BoG, the new framework reinforces its commitment to macroeconomic stability under the inflation-targeting mandate and flexible exchange rate regime, where the exchange rate continues to be determined by market forces.
Under the revised framework, the BoG’s FX operations will focus on three main objectives:
Building reserves to provide a buffer against external shocks.
Curbing excessive short-term volatility in the forex market without compromising exchange rate flexibility.
Intermediating FX flows in a market-neutral and transparent manner, using inflows from sources such as the Gold Purchase Programme and other export surrender requirements.
This approach means that the BoG will channel FX inflows into the market in an orderly way without influencing long-term exchange rate trends, the bank said in a statement issued on Wednesday, November 12.
The framework adopts a rule-based and transparent approach, allowing exchange rates to adjust naturally while reducing short-term fluctuations. FX interventions will follow a structured, discretion-under-constraint model, ensuring that actions address market inefficiencies rather than targeting specific exchange rate levels.
The BoG emphasised that reserve accumulation and market intermediation will be carried out through transparent and well-communicated operations, conducted via competitive, variable-rate, and fixed-amount auctions.
Transparency remains a key pillar of the new framework. Auction amounts will be announced in advance, and results published the same day. Additionally, twice-weekly FX operations will be pre-announced at the start of each month, while interventions to manage short-term volatility will be announced on the day of or a day before execution.
To further enhance accountability, the BoG will publish aggregated monthly FX operations data clearly outlining the objectives of each operation within five business days after month-end.
“This new FX Operations Framework reflects our commitment to transparency, market confidence, and macroeconomic stability,” the Bank of Ghana stated. “By clarifying our objectives and processes, we aim to strengthen resilience while preserving the flexibility of Ghana’s exchange rate regime.”
Story by: Mercy Addai Turkson #ahotoronline.com