BoG’s FX Interventions Helped Stabilise Market Pressures – Analyst
Economic analyst Emmanuel Boateng has defended the Bank of Ghana’s recent foreign exchange interventions, arguing that their success should be measured by their ability to stabilise the market and reduce volatility rather than completely stop the depreciation of the cedi.
According to him, expectations that central bank interventions should entirely halt currency depreciation are often unrealistic, particularly in an economy that remains exposed to both domestic and external market pressures.
Speaking on the Market Trends Segment of the Business Breakfast Show on ZED 101.9 FM, Mr. Boateng said the Bank of Ghana’s actions have played an important role in easing pressure on the foreign exchange market and preventing a more severe weakening of the local currency.
His comments come after the central bank injected approximately US$1.13 billion into the market through a series of foreign exchange auctions. The intervention followed data indicating that the cedi depreciated by 8.4 percent against major trading currencies during the first five months of the year.
Mr. Boateng explained that the objective of such interventions is not necessarily to reverse every depreciation trend but to ensure orderly market conditions and prevent excessive volatility that could undermine business confidence and economic stability.
“The effectiveness of these interventions should be assessed by how much stability they bring to the market rather than whether the cedi stops depreciating entirely,” he stated.
He noted that currency movements are influenced by a wide range of factors, including import demand, global commodity prices, investor sentiment, external shocks, and foreign exchange supply conditions. As a result, central bank interventions are designed primarily to smooth fluctuations and provide liquidity when market pressures intensify.
According to the analyst, the recent forex auctions have helped moderate demand pressures and provided reassurance to businesses and market participants at a time when concerns over exchange rate movements were beginning to grow.
He further argued that without the interventions, the cedi could have experienced a much sharper decline, with potentially greater consequences for inflation, import costs, and overall economic activity.
Mr. Boateng also stressed the importance of complementing foreign exchange interventions with broader macroeconomic policies aimed at strengthening export earnings, attracting foreign investment, and improving fiscal discipline.
He noted that while the Bank of Ghana can provide short-term market support through forex auctions, long-term exchange rate stability ultimately depends on the country’s ability to generate sustainable foreign exchange inflows and maintain strong economic fundamentals.
The economist therefore urged businesses and investors to focus on broader economic trends rather than short-term currency fluctuations, expressing confidence that continued policy coordination between monetary and fiscal authorities would help sustain stability in the foreign exchange market.
His remarks come amid ongoing discussions about the performance of the cedi and the effectiveness of the Bank of Ghana’s efforts to manage exchange rate pressures in an increasingly uncertain global economic environment.
