Investor confidence declining over Forex Rate gaps — Bokpin
By: Rebecca Okine
Professor of Finance at the University of Ghana Business School, Godfred Bokpin, says a growing lack of confidence among investors and market participants is contributing to the widening gap between Ghana’s official interbank exchange rates and the rates offered at forex bureaus.
In a media interview on Wednesday, July 9, 2025, Prof. Bokpin explained that the current situation stems from doubts about whether official rates truly reflect actual market conditions.
These doubts, he said, have pushed many forex users away from formal banking channels in search of more competitive rates on the black market.
“People are moving their foreign currency transactions from the formal financial system to the streets, where they believe the pricing is more accurate,” he noted.
The Professor of Finance further noted that this behavior fuels the black market and undermines transparency.
According to Prof. Bokpin, the Bank of Ghana’s involvement in the forex market is not inherently wrong. He clarified that central bank interventions are permitted to manage volatility or economic instability.
However, excessive interference, he warned, can distort price discovery, a fundamental feature of open markets.
“The real issue is the degree of interference, because when people sense that prices are being overly controlled, they lose faith in the system,” he explained.
Providing historical context, Prof. Bokpin recalled that forex bureaus were once part of Ghana’s black market system during the 1970s and 1980s.
He said it was through financial reforms led by the International Monetary Fund and the World Bank that these markets were formalized and brought under regulation.
Prof. Bopkin explained that the current shift back toward informal forex trading mirrors the same conditions that previously enabled black markets to thrive: weak regulatory confidence, opaque pricing mechanisms, and a breakdown in public trust.
Restoring trust, he stressed, requires transparency, policy clarity, and consistent communication. “The goal should be for pricing to reflect demand and supply dynamics and that is what builds long-term trust,” Prof. Bokpin emphasized.
He urged policymakers to avoid sending mixed signals to the market and to ensure that monetary interventions are measured and justified, rather than seen as attempts to artificially control the exchange rate.
.
As the country works toward economic recovery, experts like Prof. Bokpin argue that restoring public and investor confidence in market pricing will be crucial to ensuring stability in the forex market and the broader economy.
