Bank of Ghana Injected Nearly $13 Billion into FX Market Within One Year

The International Monetary Fund (IMF) has revealed that the Bank of Ghana (BoG) injected nearly US$13 billion into Ghana’s foreign exchange (FX) market over the course of approximately one year as part of efforts to stabilise the cedi and maintain orderly market conditions.

The disclosure offers one of the clearest indications yet of the scale of intervention undertaken by Ghana’s central bank during a period marked by significant economic adjustment, improving investor confidence and a stronger local currency.

While central banks around the world routinely intervene in foreign exchange markets, the size of Ghana’s intervention has drawn attention because of its potential implications for foreign reserves, inflation and the country’s broader economic recovery.

Why Did the Bank of Ghana Inject Nearly US$13 Billion into the FX Market?

Foreign exchange interventions are typically carried out when demand for foreign currencies such as the US dollar rises sharply, creating pressure on the local currency.

By selling dollars into the market, a central bank can:

• Reduce excessive demand for foreign currency.
• Slow rapid depreciation of the local currency.
• Improve liquidity for banks and importers.
• Help maintain price stability.
• Reduce inflationary pressure caused by expensive imports.

For Ghana, stabilising the cedi has become particularly important after several years of economic turbulence that saw the currency experience significant depreciation, pushing up the prices of imported goods, fuel and industrial inputs.

A more stable exchange rate can help businesses plan ahead with greater confidence and may contribute to moderating inflation over time.

The intervention comes as Ghana continues implementing reforms under its IMF-supported economic programme.

Recent improvements in macroeconomic indicators, including easing inflation, stronger fiscal discipline and renewed investor confidence, have contributed to a more stable economic environment compared with previous years.

Economists generally note that exchange rate stability benefits both businesses and consumers by reducing uncertainty in pricing and investment decisions.

However, many also point out that sustained currency stability ultimately depends on broader economic fundamentals rather than foreign exchange intervention alone.

Those fundamentals include:

• Export growth.
• Foreign direct investment.
• Government fiscal discipline.
• Growth in foreign reserves.
• Strong domestic production.

Without improvements in these areas, continued large-scale interventions could become increasingly difficult to sustain over the long term.

Businesses that rely heavily on imports have generally welcomed the recent stability of the cedi.

A relatively stable exchange rate can help companies:

• Forecast costs more accurately.
• Reduce sudden increases in import prices.
• Improve inventory planning.
• Negotiate contracts with less exchange-rate uncertainty.

Manufacturers and retailers, in particular, often experience significant challenges when exchange rates fluctuate sharply over short periods.

For exporters, however, a stronger local currency can sometimes reduce the competitiveness of Ghanaian products in international markets, making the balance between stability and competitiveness an important policy consideration.

The IMF’s assessment provides additional insight into how actively the Bank of Ghana has been managing the country’s foreign exchange market.

Rather than relying solely on market forces, the central bank appears to have played a significant role in supplying foreign currency during a critical period of Ghana’s economic adjustment.

The disclosure also gives investors, businesses and policymakers a clearer understanding of the measures taken to support financial stability while Ghana continues implementing reforms under its IMF programme.