The Bank of Ghana (BoG) has announced it will begin selling up to $1.15 billion through commercial banks starting this month, in what marks a significant return to active forex market intervention despite recent warnings from international financial institutions.
The sales will take place under the Domestic Gold Purchase Programme, with the central bank conducting twice-weekly, price-competitive auctions open to all licensed banks. The move aims to stabilize the cedi and improve foreign exchange availability for business transactions, using gold purchased from local producers to back the dollar sales.
BoG Governor Dr. Johnson Pandit Asiama announced the initiative during a post-Monetary Policy Committee engagement with bank CEOs on Tuesday in Accra. He emphasized that the auctions will operate without special conditions or favoritism, ensuring every licensed bank has equal opportunity to participate.
“Beginning October 2025, the Bank of Ghana will commence foreign exchange intermediation under the Domestic Gold Purchase Programme, with plans to sell up to $1.15 billion for the month,” Dr. Asiama said. “These sales will be conducted on a spot basis through twice-weekly, price-competitive auctions open to all licensed banks. Importantly, there will be no conditions or earmarking for allocations, ensuring a level playing field and transparent access to the market.”
The governor explained that the auctions aim to deepen Ghana’s interbank foreign exchange market, enhance price discovery, and reduce sudden exchange rate swings. In practical terms, this means making it easier for banks to trade dollars among themselves, potentially preventing sharp jumps in exchange rates when businesses pay for imports or individuals receive remittances.
Monthly auction volumes may be adjusted depending on market conditions, but the central bank remains committed to transparency, promising to disclose all forex market operations and outcomes in line with international best practices.
However, the timing of this announcement is notable. Both the International Monetary Fund and the World Bank have recently cautioned the BoG against excessive intervention in the forex market, warning that heavy-handed interventions could lead to market distortions, drain reserves, and weaken economic resilience. The central bank’s forex market intervention in the first quarter of 2025 reached $1.4 billion, with the total exceeding $2 billion when Q1 and Q2 are combined.
The IMF specifically recommended that BoG reduce its footprint in the foreign exchange market and allow for greater exchange rate flexibility. Finance expert Professor Godfred Bopkin backed this recommendation, warning that excessive control by the central bank is distorting pricing and creating inefficiencies.
The BoG’s latest move suggests the central bank is balancing competing priorities: responding to IMF concerns about market distortions while addressing domestic pressures for cedi stability. The challenge lies in determining where intervention becomes counterproductive.
For ordinary Ghanaians and businesses, success of these auctions could mean cedi stability, potentially less expensive imported goods, and better planning without unpredictable currency fluctuations. But critics worry that continued heavy intervention may simply delay necessary market adjustments while depleting reserves that could be needed for genuine crises.
The real test will be whether the BoG can use this $1.15 billion effectively to smooth volatility without creating the artificial stability that international lenders have warned against. It’s a delicate balance, and October’s performance will likely influence how aggressively the central bank intervenes in coming months.
www.newsghana.com.gh