08/10/2025
BANK OF GHANA TO INJECT USD 1.15BN INTO FOREX MARKET TO STABILISE THE CEDI
Institute of Political Studies, IPS-Ghana Perspective
The Bank of Ghana’s announcement to inject USD 1.15 billion for forex market intermediation sets it on a direct collision course with Ghana’s major Economic partners, the International Monetary Fund (IMF) and the World Bank, who have repeatedly urged the Bank of Ghana to avoid excessive foreign exchange (FX) interventions.
This latest announcement by the Bank of Ghana brings the Central Banks’s total direct foreign exchange intervention for the 2025 fiscal year to about USD 4.55 billion, following a USD 1.4 billion injection in Q1 2025 and over USD 2 billion in Q2 2025.
While aimed at stabilizing the domestic currency, this excessive forex market intervention flies in the face of explicit advice from the IMF and World Bank who advocate for a market led approach to allow for greater exchange rate flexibility through the forces of demand and supply.
The IMF and World Bank have consistently argued that large scale forex interventions are unsustainable and counter productive, as such actions could disrupt market balance and weaken economic resilience.
After Bank of Ghana made great progress between March 2024 and June 2025 on reserve accumulation, Ghana’s gross international reserves buffers plummeted the first time in fifteen (15) months decreasing from USD 11.1 billion in June 2025 to USD 10.7 in September 2025 with international reserve coverage ratio also decreasing from 4.8 months imports cover to 4.5 months imports cover.
The decline in Ghana’s Gross International Reserves from USD 11.1billion in June 2025 to USD 10.7 billion at the end of September 2025 is a clear indicator that the Bank of Ghana’s uncontrolled and excessive foreign exchange market intermediation is depleting the country’s already limited foreign exchange reserves which are crucial for covering essential imports and serving as a suffer against external shocks.
The continuous and excessive forex market intervention threatens to reverse the hard won gains in reserve accumulation, undermining investor confidence and weakening economic resilience.
Recommendation
1. Adequate international reserve buffers are especially important in the current global and domestic macroeconomic environment. A healthy reserve position can help an economy recover more quickly from an unexpected shock, and so boosts overall confidence. In addition, international reserves can be used to limit the impact of short-term exchange-rate volatility, which can be key in countries with shallow financial markets and less-well anchored inflation expectations.
2. The Bank of Ghana should prioritize reserve building measures, undertake structural reforms and ensure greater investment in real sector growth. These when implemented successfully will enhance Ghana's economic resilience, reduce external imbalances and ensure a sustained long-run foreign exchange stability, and lay a solid foundation for sustainable long-term growth and macroeconomic stability.
Conclusion
Going forward, the Bank of Ghana should maintain a clear transparent reserve accumulation strategy aligned with macroeconomic stability objectives, and complement this with sound monetary stabilization tools to reinforce the broader economic framework.
