BoG Announces New Foreign Exchange Operations Framework

By Praisebell Rosemond Larbi

The Bank of Ghana (BoG) has introduced a new Foreign Exchange (FX) Operations Framework aimed at strengthening transparency, enhancing market confidence, and safeguarding macroeconomic stability under its inflation-targeting regime.

Approved by the Board of the central bank, the framework provides a clear structure for the Bank’s foreign exchange operations, defining its guiding principles and operational objectives within Ghana’s flexible exchange rate system.

In a statement, the Bank of Ghana said the new framework reaffirms its commitment to a market-determined exchange rate while ensuring that FX interventions remain rule-based, transparent, and consistent with its broader mandate to maintain price and financial stability.

Three Core Objectives

The new framework outlines three primary objectives that will guide the central bank’s FX operations.

First, the BoG will support reserve accumulation to build buffers against external vulnerabilities and shocks. This will help reinforce the country’s capacity to withstand global market turbulence and protect the stability of the cedi.

Second, the central bank will act to dampen excessive short-term volatility in the foreign exchange market, intervening only when market conditions become disorderly or speculative, without undermining the flexible exchange rate policy.

Third, the BoG will intermediate FX flows from key inflows such as the Gold Purchase Program and other export surrender requirements in a market-neutral and transparent manner. This means foreign exchange inflows will be channeled into the market without influencing long-term exchange rate trends.

Rule-Based and Transparent Operations

According to the BoG, the framework adopts a rule-based approach that allows market forces to determine exchange rates while ensuring interventions are limited to addressing market imbalances or distortions.

FX interventions will be guided by a “structured discretion-under-constraint” approach,where actions are taken only to correct short-term market disruptions, not to defend any particular exchange rate level.

All operations will be conducted through competitive, variable-rate, fixed-amount auctions to ensure fairness and transparency in the allocation of foreign exchange.

Clear Communication and Accountability The Bank emphasised that transparency and timely communication