ADVERTISEMENT
Get Started
  • About Homebase Tv | Hbtvghana.com
  • Advertise
  • Broadcast Live
  • Disclaimer
  • Privacy & Policy
  • Terms and Conditions
  • Vacancies
  • Contact Us – Connect With Us
Homebase Tv - Hbtvghana.com
  • Home
  • General News
  • Business News
  • Health
  • Life & Style
  • Politics
    • Press Release
    • Parliament
  • Sports
No Result
View All Result
  • Home
  • General News
  • Business News
  • Health
  • Life & Style
  • Politics
    • Press Release
    • Parliament
  • Sports
No Result
View All Result
Homebase Tv - Hbtvghana.com
No Result
View All Result
ADVERTISEMENT
ADVERTISEMENT

Aephaniel Owusu-Agyemang: Why the IMF recommends reducing forex market intervention in Ghana

Wed, Jul 9 2025 3:37 PM
in Ghana General News
aephaniel owusu agyemang why the imf recommends reducing forex market intervention in ghana
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on TelegramShare on Whatsapp
ADVERTISEMENT
image 694

The International Monetary Fund (IMF) has recently advised the Bank of Ghana (BoG) to scale back its interventions in the foreign exchange (forex or FX) market. While such recommendations might appear complex to the average Ghanaian, the essence of the message is simple: allow the market to work more naturally while strengthening the economy in the long term.

This advice comes at a time when Ghana has been grappling with persistent currency depreciation, rising inflation, and pressure on foreign reserves. To help ordinary citizens better understand the IMF’s position, this article breaks down the reasons and benefits behind the recommendation.

Why Does the Central Bank Intervene in the Forex Market?

First, it’s important to understand what forex intervention means. When the Ghana cedi is losing value rapidly against major currencies like the US dollar, the BoG may sell its foreign currency reserves mostly dollars to support the cedi. This short-term measure can stabilize the exchange rate, make imports more affordable, and calm investor nerves.

These interventions help in a few ways which includes

  • Stabilizing the currency: Prevents the cedi from falling too quickly, which could make essential goods like medicine, fuel, and food even more expensive.
  • Boosting confidence: Shows that the central bank is actively working to protect the economy, which reassures businesses and investors.
  • Supporting imports: A stable exchange rate helps importers plan better and protects consumers from price shocks on imported goods.

However, while these short-term actions offer temporary relief, they come with long-term risks that the IMF believes Ghana must address.

ReadAbout

Visa Vultures and the Republic of Overstayers

We must wake up and learn lessons from a landlocked giant, Switzerland

Bright Simons: Ghana and Nigeria are early victims of new US visa restrictions policy

The Risks of Over-Intervention

The IMF’s main concern is that frequent interventions in the forex market are not sustainable. Here’s why:

  1. Depleting Foreign Reserves
    Every time the BoG sells US dollars to support the cedi, it draws from the country’s foreign reserves. These reserves are like a safety net, meant to be used in times of crisis. If they are used too often, Ghana could run low on the very funds it needs during economic emergencies or for critical imports.
  2. Fueling Inflation
    Selling foreign currency usually involves injecting more cedis into the system. Too much local currency in circulation can lead to higher prices for goods and services which is inflation. This occurs as a result of  the demand -pull inflationary effects of where demand increase do not match up to production.
  3. Artificial Stability
    Constant interventions can create a false sense of calm. While the exchange rate may appear stable, the underlying economic problems will remain unaddressed. This artificial stability can deter long-term investors who prefer predictable and market-driven conditions.

The IMF’s Recommendation: A Shift to Smarter Policy

Rather than relying heavily on interventions, the IMF is urging Ghana to adopt a more structured and transparent policy framework for managing its currency. This includes:

  • Letting the market play a bigger role in setting exchange rates, known as a managed float system.
  • Using interest rate policy to manage inflation instead of direct forex market support.
  • Building strong institutionalframeworks to improve transparency and predictability in the FX market.

By doing this, Ghana can build a more resilient economy and reduce the risks of inflation and reserve depletion.

The Benefits of a Proper FX Policy Framework

Implementing a clear and effective FX policy framework has several long-term advantages:

  • Protects the economy by preserving foreign reserves for genuine emergencies.
  • Boosts investor confidence through transparency and predictability.
  • Promotes price stability, helping citizens and businesses better manage their budgets.
  • Encourages economic self-reliance, reducing the need for external bailouts or emergency funding.

What This Means for Everyday Ghanaians

At the heart of this policy recommendation is the wellbeing of Ghanaians. Less frequent intervention doesn’t mean the BoG will stop protecting the cedi. It means it will do so more wisely. In the long run, this approach can help:

  • Keep the cost of living in check.
  • Ensure Ghana has enough reserves for imports.
  • Create a more stable and trustworthy economic environment.

Conclusion

The IMF’s recommendation for Ghana to reduce its forex market intervention is not about doing less it’s about doing better. By strengthening its FX policy framework, managing inflation smartly, and preserving critical reserves, Ghana can build a more stable economy that serves both present and future generations. With the right policies in place, Ghana can chart a path toward sustainable growth and financial independence.

DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.

DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.

  • President Commissions 36.5 Million Dollars Hospital In The Tain District
  • You Will Not Go Free For Killing An Hard Working MP – Akufo-Addo To MP’s Killer
  • I Will Lead You To Victory – Ato Forson Assures NDC Supporters

Visit Our Social Media for More

About Author

c16271dd987343c7ec4ccd40968758b74d64e6d6c084807e9eb8de11a77c1a1d?s=150&d=mm&r=g

hbtvghana

See author's posts

Discover interesting ones too

Excessive rain, poor sunlight, plummeting cocoa yields – Concerned farmers

Excessive rain, poor sunlight, plummeting cocoa yields – Concerned farmers

0
Bawumia ‘excited’ Kudus is joining ‘his club’ Tottenham

Bawumia ‘excited’ Kudus is joining ‘his club’ Tottenham

0

K-pop singer jailed three and a half years for rape

K-pop singer jailed three and a half years for rape

Visa Vultures and the Republic of Overstayers

Newly inaugurated Board of GSA charged to clampdown on substandard products flooding the market

Newly inaugurated Board of GSA charged to clampdown on substandard products flooding the market

Access Bank pledges one million sanitary pads to support government’s fight against period poverty

Access Bank pledges one million sanitary pads to support government’s fight against period poverty

Trade Minister inaugurates GIPC, Exim Bank GSA boards to accelerate Ghana’s investment and national growth

  • Ghana and Japan agree to pursue UN Security Council reforms

    Ghana and Japan agree to pursue UN Security Council reforms

    0 shares
    Share 0 Tweet 0
  • I resigned because of Prez. Mahama, NDC – former GBA President

    0 shares
    Share 0 Tweet 0
  • Rastafarian student Oheneba Nkrabea graduates from GIS after Achimota saga

    0 shares
    Share 0 Tweet 0
  • We slept in the same bed, but Ken Ofori-Atta’s legacy betrayed our hope – Frank Adu Jnr

    0 shares
    Share 0 Tweet 0
  • Western Region police arrest 44 suspects in major ‘galamsey’ raid

    0 shares
    Share 0 Tweet 0
ADVERTISEMENT
ADVERTISEMENT

Follow Homebase Tv

  • About Homebase Tv | Hbtvghana.com
  • Advertise
  • Broadcast Live
  • Disclaimer
  • Privacy & Policy
  • Terms and Conditions
  • Vacancies
  • Contact Us – Connect With Us

© 2014 Total Enjoyment & Proper News

No Result
View All Result

© 2014 Total Enjoyment & Proper News

Welcome Back!

Login to your account below

Forgotten Password?

Retrieve your password

Please enter your username or email address to reset your password.

Log In
This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Cookie settingsACCEPT
Privacy & Cookies Policy

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Non-necessary
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.
SAVE & ACCEPT

Add New Playlist

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.