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MBN360
The Bank of Ghana (BOG) has launched a new Foreign Exchange Operations (FX) Framework, aimed at enhancing transparency and clarity in its FX operations. The framework outlines three key objectives: supporting reserve accumulation, dampening excessive short-term volatility, and intermediating FX flows in a market-neutral manner.
The new framework adopts a rule-based approach, allowing exchange rates to be determined by market forces, while limiting excessive short-term volatility. Transparency is a cornerstone, with auction amounts announced in advance and results published on the same day. The BOG will also release aggregated monthly FX operations data, distinguishing between operational objectives, to promote accountability.
The FX operations will be conducted through competitive, variable-rate, fixed-amount auctions. The framework emphasizes a structured discretion-under-constraint approach, ensuring interventions address market failures without targeting a specific exchange rate level.
This initiative is expected to strengthen Ghana’s exchange rate regime, promote macroeconomic stability, and boost market confidence. The BOG’s new FX Framework will support reserve accumulation to provide a buffer against external vulnerabilities, dampen excessive short-term volatility in the foreign exchange market, and intermediate FX flows in a market-neutral manner using inflows from sources such as the Gold Purchase Programme.
Additionally, the framework will conduct FX operations through competitive, variable-rate, fixed-amount auctions, and prioritize transparency and accountability by publishing auction results and aggregated monthly FX operations data.
