SEC Tightens Offshore Investment Rules to Support Cedi
The Securities and Exchange Commission (SEC) has introduced tighter limits on offshore investments by local fund management companies as part of efforts to stabilize the cedi and strengthen confidence in the domestic financial market.
In a circular issued late on Friday, the Commission directed that fund managers will, with immediate effect, be allowed to invest no more than 20 per cent of their total assets under management in foreign securities.
The directive also affects funds that previously had approval to invest all their portfolios outside the country. Such funds will now be restricted to a maximum of 70 per cent exposure to offshore investments.
According to the SEC, investments in foreign securities must be undertaken only in jurisdictions that have information-sharing arrangements with the Commission, a measure aimed at improving regulatory oversight and protecting investors.
The new restrictions come against the backdrop of efforts to consolidate recent gains in the foreign exchange market following a period of significant volatility that saw the cedi weaken sharply. Authorities have in recent months rolled out a number of policy measures to curb capital outflows and encourage greater participation in domestic financial instruments.
Ghana is currently implementing economic reforms under an International Monetary Fund (IMF) support programme, with government officials maintaining that fiscal discipline and improved market regulation remain critical to sustaining the country’s recovery.
Financial analysts say the SEC’s move is expected to increase liquidity within the local capital market by redirecting a larger share of funds into domestic securities. However, some fund managers may face short-term challenges in adjusting their portfolios, particularly those with strong offshore exposure.
Despite these concerns, regulators believe the policy will help deepen the local market, reduce pressure on the cedi and support broader macroeconomic stability.
