News Guide Africa

Tag: foreign exchange (FX)

  • BoG amends Cash Reserve Ratio to mop up GH¢16bn …and shield Cedi from market pressures

    BoG amends Cash Reserve Ratio to mop up GH¢16bn …and shield Cedi from market pressures

    By Adnan Adams Mohammed

    In a decisive regulatory intervention designed to insulate the domestic currency from building macroeconomic shocks, the Bank of Ghana (BoG) is adjusting its Cash Reserve Ratio (CRR) framework.

    According to internal policy evaluations and market analysts, the sweeping technical amendment is highly likely to drain more than GH¢16.0 billion (US$1.1 billion equivalent) in excess liquidity from the interbank market, providing immediate structural relief to the Ghanaian cedi.

    The proactive liquidity squeeze represents a major cornerstone of the central bank’s broader strategy to aggressively anchor inflation, manage asset-liability currency mismatches, and maintain the current macroeconomic reset.

    Currency realignment eliminates structural banking risks

    The regulatory adjustment fine-tunes the dynamic CRR framework for commercial banks by utilizing a strict currency-matching operational system. Under previous iterations, financial institutions were allowed to maintain cedi-equivalent reserves against foreign-currency deposits. This mechanism often introduced severe asset-liability imbalances when severe foreign exchange volatility emerged.

    By mandating that cash reserves be held in the exact currency of the corresponding deposit liabilities, the central bank eliminates the structural imbalance. The move effectively locks up billions in volatile foreign exchange and domestic liquidity that would otherwise put intense pressure on commercial exchange windows.

    Central bank data confirms that this enforcement arrives at a time of exceptional macroeconomic recovery. Headline inflation in Ghana has seen a sharp decline, plummeting from 23.8 percent in December 2024 down to a stable 3.4 percent. Concurrently, the central bank has built up its gross international reserves to a robust $14.4 billion—providing 5.7 months of solid import cover to cushion the state against unpredictable global disruptions.

    Policy Rate maintained at 14% to preserve stability

    The liquidity drain coincides with the decision of the BoG’s Monetary Policy Committee (MPC) to hold the benchmark Monetary Policy Rate steady at 14.0 percent. Speaking on the decision, the Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, explained that while the internal economy is recovering strongly, geopolitical uncertainties in the Middle East and global commodity market volatility demand a highly vigilant policy stance.

    “The committee assessed risks in the outlook to inflation and growth as broadly balanced, and therefore decided to maintain the monetary policy rate at 14.0 percent,” Dr. Asiama stated during his policy briefing. “Our domestic economy continues to recover strongly, supported by robust private sector credit growth, industrial production, and expanding international trade. However, exchange rate stability, rising reserve buffers, and continued fiscal discipline remain our primary operational tools to moderate emerging risks.”

    Governor urges CEOs to deploy private capital for industrialization

    Addressing captains of industry at the 10th Ghana CEO Summit in Accra, Governor Asiama emphasized that while the central bank is absorbing billions of excess cedis to guarantee monetary and price stability, the responsibility for structural transformation now shifts to the private sector.

    “Macroeconomic stability creates an enabling environment, but it is the private sector that must ultimately drive the country’s economic reset,” Governor Asiama told the assembly of corporate executives. “Ghana has now moved past economic recovery to a state of converting those gains into a foundation for industrial competitiveness. As CEOs, you are the architects of economic growth… Ghana’s economic transformation will not happen by accident; it will require disciplined choices, resilient institutions, innovative businesses, and courageous leadership.”

    The Governor noted that the central bank’s aggressive open market stabilization interventions—which incurred GH¢17 billion in liquidity management expenses to secure the historic inflation drop—were completely necessary to give local businesses a stable, predictable horizon to invest their equity.

    Private sector demands sustained policy predictability

    The central bank’s focus on macro-stability was welcomed by corporate leaders at the summit, who agreed that keeping excess cash from chasing scarce foreign exchange is critical for long-term corporate forecasting. Business heads noted that the combination of a steady 14 percent policy rate, aggressive liquidity absorption via the CRR, and an expanding national reserve buffer provides a reliable shield against the currency depreciations that historically eroded corporate capital.

    With the central government concurrently enforcing a mandatory commitment control regime to curb state spending, the synchronized alignment of monetary and fiscal policies signals that Ghana is aggressively fortifying its defensive structures to ensure the current growth surge is sustained far into the future.

     

     

     

     

     

  • BoG rejects artificial market intervention …focuses on reserve accumulation to anchor cedi and check volatility

    BoG rejects artificial market intervention …focuses on reserve accumulation to anchor cedi and check volatility

    The Bank of Ghana (BoG) has firmly ruled out executing artificial or heavy-handed interventions in the foreign exchange market to manage recent demand pressures on the local currency.

    Instead, the regulator assured that its policy focus remains squarely fixed on aggressive reserve accumulation and structural market stability to cushion the cedi against global shocks.

    The central bank confirmed that while the cedi has experienced localized pressures, its core strategy relies on allowing a flexible exchange rate regime to absorb external volatility naturally. Policy coordinators emphasized that the bank’s key priority is to prevent excessive, speculative fluctuations rather than trying to force an artificial value on the market.

    Reserves over artificial interventions

    Addressing the press following the conclusion of the 130th Monetary Policy Committee (MPC) meetings in Accra, Bank of Ghana Governor Dr. Johnson Pandit Asiama explained that modern market fundamentals, rather than ad-hoc dollar injections, must dictate the local currency’s path.

    “We are not intervening in the market in a manner that distorts the exchange rate. What we are doing is building reserves and strengthening buffers for the economy,” Dr. Asiama declared. “The relative stability of the cedi in recent months has largely been driven by improved market fundamentals, stronger inflows, and growing investor confidence. The reserve accumulation programme is progressing well, and this is providing confidence to the market.”

    The Governor explained that attempting to defend the currency through continuous, artificial market injections is a short-term approach that drains vital national resources.

    “Our objective is to ensure long-term macroeconomic stability and avoid a return to the era of sustained currency depreciation,” Dr. Asiama stressed. “Global uncertainties, particularly tensions in the Middle East and fluctuations in commodity prices, continue to pose risks to emerging market currencies, including the cedi. However, Ghana’s improving macroeconomic indicators and stronger foreign reserve position are helping to cushion the economy against these external pressures.”

    Embracing a flexible exchange rate strategy

    Reinforcing the Governor’s stance, senior technical directors within the central bank’s monetary operations department noted that a flexible exchange rate mechanism remains the country’s primary defense against global financial imbalances.

    Officials explained that allowing the cedi to adjust dynamically ensures that domestic industries remain globally competitive while discouraging speculative hoarding by retail actors.

    “A flexible exchange rate regime is absolutely critical in absorbing external shocks,” a first deputy governor at the central bank observed during market briefings. “When external cost-push pressures or geopolitical disruptions occur, a rigid exchange rate can mask the economic reality and lead to sudden, severe structural breaks. By allowing the currency to reflect authentic demand and supply dynamics, the economy adjusts more smoothly, ensuring long-term fiscal predictability.”

    Mitigating speculation and avoiding excessive volatility

    Despite backing a flexible framework, the central bank clarified that it will maintain a highly active supervisory eye on commercial banking treasury desks to prevent predatory trading and speculative distortions.

    Treasury operators note that while normal commercial demand from bulk distribution companies and manufacturing importers is expected, the regulator is moving swiftly to eliminate panic-buying behavior.

    “Our primary concern at this stage is to avoid excessive volatility that is not supported by real economic data,” a senior central bank market specialist remarked. “We understand that corporate operators require foreign exchange for their forward planning, and the market has sufficient liquidity to support those legitimate transactions. What we are actively working against are speculative spikes driven by sentiment rather than actual trade requirements. We have the necessary mechanisms to smooth out temporary imbalances without altering the natural trend of the market.”

    With state gold-purchase programs continuing to actively bolster the central bank’s monetary gold reserves, financial analysts in Accra express confidence that the regulator’s current strategy will successfully steer the cedi through mid-year import cycles while avoiding severe inflationary pass-through effects.

     

     

  • Mahama Administration prioritizes gold as the new economic anchor

    Mahama Administration prioritizes gold as the new economic anchor

    By Adnan Adams Mohammed

    In a move aimed at permanently decoupling Ghana’s economic fate from the volatility of external debt, the Mahama administration has positioned the gold sector as the primary engine for the nation’s “Golden Reset.”

    However, as the government moves to centralize control, experts are warning that the nation “cannot afford a second shock” if the transition is mismanaged.

    “Taking back control”: the Gyamfi doctrine

    Leading the charge for this structural overhaul, Sammy Gyamfi, a key figure in the administration’s economic communications, outlined a bold vision to end decades of “resource leakage.” Speaking at a high-level forum, Gyamfi declared that the gold sector is no longer just a mining industry but the cornerstone of Ghana’s foreign exchange (FX) stability.

    “For too long, our gold has left these shores with minimal benefit to the Ghanaian person,” Gyamfi stated. “We are taking back control. By ensuring that a significant percentage of gold produced locally stays within our sovereign reserves, we are building a bulletproof shield for the Cedi.”

    The plan involves a multi-pronged approach:

    The first prong is ending FX Leakages through new mandates that require mining firms to repatriate a higher portion of their export earnings through the Bank of Ghana.

    The second prong is the gold-for-stability swap which involves using physical gold as a primary reserve asset to back the national currency, reducing reliance on the US Dollar.

    The third prong is formalizing artisanal mining by bringing small-scale miners into the formal “GoldBod” (Gold Board) ecosystem to ensure every ounce produced contributes to the national treasury.

    The GoldBod risk: a warning against “second shocks”

    Despite the optimism from the Jubilee House, industry analysts and civil society groups are waving a yellow flag. A recent report from Citi Newsroom highlights a growing consensus that the newly formed Ghana Gold Board (GoldBod) must operate with surgical precision.

    The memory of the 2022 financial crisis remains fresh, and critics argue that any operational failure or corruption within GoldBod could trigger a “second shock” to the economy. If the board fails to manage its new role as the sole off-taker and exporter effectively, it could disrupt supply chains, spook international mining conglomerates, and lead to a massive shortfall in anticipated revenue.

    “Ghana is putting all its eggs in one golden basket,” cautioned a senior researcher at the Centre for Democratic Development (CDD). “If GoldBod becomes a site for political patronage rather than technical excellence, the ‘Golden Reset’ could quickly turn into a gilded disaster.”

    Economic transformation or high-stakes gamble?

    The administration remains undeterred. Gyamfi emphasized that the “leaks” in the previous system referring to the era of the “Gilded King” were systemic and required a radical break from the past. He argued that the centralization of gold trade is not an act of “resource nationalism” but one of “economic survival.”

    As the government prepares to fully operationalize the sliding royalty scale and GoldBod’s trading floor, the eyes of the international market are on Accra. The success of this policy will determine if Ghana can finally transform its status from a “resource-rich but cash-poor” nation into a self-sustaining economic powerhouse.

     

     

     

     

  • Ghana’s Golden Reset: Reforms, Revenue, and the Retreat of the Gilded King

    Ghana’s Golden Reset: Reforms, Revenue, and the Retreat of the Gilded King

    By Adnan Adams Mohammed,

    As the global gold market faces a “technical reset” in the first quarter of 2026, Ghana is doubling down on a domestic “Gold Reset” of its own.

    While international bullion prices have slipped below the US$4,700 mark due to the “Iron Grip” of hawkish central banks, Ghana’s newly established Gold Board (GoldBod) is reporting record-breaking success in harnessing the country’s mineral wealth to stabilize the Cedi and boost foreign exchange (FX) reserves.

    The global retreat: yield over bullion

    For centuries, gold was the undisputed safe haven. However, 2026 has introduced a fascinating paradox: inflation is currently hurting gold rather than helping it. With U.S. Federal Reserve rates remaining “higher for longer” and oil prices hovering above US$100, the opportunity cost of holding the “shiny rock” has soared.

    “Gold doesn’t pay a dividend,” noted one market analyst. “When government bonds offer a guaranteed 5% return, investors are trading gold for yield.” This global shift saw gold retreat from its all-time high of US$5,595 per ounce earlier this year. Yet, while the “Gilded King” remains in retreat globally, the narrative in Accra is one of aggressive accumulation and structural reform.

    The “Sammy Gyamfi plan”: ending leakages

    At the heart of Ghana’s economic strategy is Sammy Gyamfi, CEO of GoldBod, who recently outlined a bold vision to “reset” the gold narrative. According to Gyamfi, the era of chaotic, unregulated gold trading which fueled smuggling and deprived the state of vital FX is over.

    “We are proving that when resource wealth is combined with bold thinking, Africa can achieve greatness,” Gyamfi stated during a recent mining convention.

    The “Gyamfi Plan” focuses on three critical pillars:

    One is centralized control. GoldBod has assumed the role of the sole exporter of gold from the small-scale sector, effectively barring foreign middlemen from buying directly from local miners.

    The second is traceability and accountability. For the first time, Ghana has set clear timelines for full gold traceability, ensuring every gram is linked to a licensed, compliant mine.

    The tird is the use of District Buying Centres To curb the US$250 million lost weekly to smuggling, GoldBod is rolling out District Gold Buying Centres (GDGBCs) to bring the state’s purchasing power closer to the miners.

    A US$10.8 billion shield

    The results of these reforms are already appearing in the national ledger. In 2025, gold exports from the Artisanal and Small-Scale Mining (ASM) sector surged to 104 tonnes, generating a staggering US$10.8 billion in export revenue. This influx of forex provided a critical shield for the Cedi, which appreciated by approximately 40% against the US dollar in 2025, moving from GH¢16 to below GH¢12 by year-end.

    “The success of the Gold-for-Reserves (G4R) programme cannot be measured simply by profit and loss,” Gyamfi argued, dismissing claims of operational losses. “It is a forex generation initiative. The opportunity cost of failing to mobilize that US$10.8 billion would have far exceeded any accounting differentials.”

    The road ahead: 2026 and beyond

    As GoldBod prepares to assume full operational control this year, the focus is shifting toward value addition. A US$1 billion partnership aims to establish local refineries, transitioning Ghana from an exporter of raw doré to a hub for refined bullion.

    While global investors wait for central banks to “soften their tone” and provide the oxygen gold needs to rally, Ghana is not waiting. By institutionalizing sovereignty over its gold sector, the country is ensuring that even if the global price of gold fluctuates, the benefit to the Ghanaian taxpayer remains secure.

    In 2026, the “Safe Haven” may have a new landlord in the form of central bank policy rates, but in Ghana, the “Gold Reset” is ensuring the house remains built on a foundation of solid, traceable, and state-backed bullion.

     

     

     

  • Gold reserve rebalancing vital for debt stability – banking expert

    Gold reserve rebalancing vital for debt stability – banking expert

    By Adnan Adams Mohammed

    In a move that has sparked intense discussion within Ghana’s financial circles, the Bank of Ghana (BoG) has rebalanced a portion of its gold reserves into foreign exchange assets.

    With some observers questioning the timing, prominent banking consultant Dr. Richmond Atuahene has come out in strong support of the central bank, describing the move as a “justified and necessary” strategy to protect the nation’s creditworthiness.

    The clarification follows a recent briefing by BoG Governor Dr. Johnson Pandit Asiama to Parliament’s Economy and Development Committee regarding the central bank’s reserve management and the broader health of the banking sector.

    Liquidity vs. long-term buffers

    Dr. Atuahene explained that while gold is an excellent long-term hedge, it cannot always settle immediate “hard currency” bills. He noted that Ghana faced a significant external debt hurdle early this year including a critical Eurobond maturity at a time when fresh foreign currency inflows were limited.

    “Just having the gold does not automatically boost your reserves if you cannot manage it well,” Dr. Atuahene argued. “When you have a liability to pay, you need to make sure you pay it. The government has not generated any foreign currency, so what you have to do is reduce your gold reserves and get money to pay the debt.”

    He emphasized that under the Foreign Exchange Act, the BoG is mandated to manage reserves dynamically to ensure the cedi remains stable and that the state does not default on its international obligations.

    The success of the Gold Purchase Programme

    The decision to rebalance comes from a position of relative strength. Since the launch of the Domestic Gold Purchase Programme, Ghana’s gold holdings have seen an unprecedented surge:

    2021 Holdings: ~8.7 tonnes

    October 2025 Holdings: Over 40 tonnes

    Reserve Share: Gold now constitutes roughly 42% of Ghana’s Gross International Reserves.

    A standard central bank maneuver

    Dr. Atuahene maintained that converting gold to liquid foreign exchange is a standard tool in a central bank’s arsenal. By rebalancing, the BoG was able to maintain adequate liquidity in its portfolio, ensuring that the “New Year” debt obligations were met without triggering a currency crisis or a dip in investor confidence.

    “In foreign exchange management, you hedge in gold and other assets to make sure the cedi remains stable,” he added.

    As Ghana continues to navigate its post-debt-restructuring landscape, the BoG’s ability to pivot between physical gold and liquid cash will likely remain a cornerstone of its strategy to keep the economy afloat amid global volatility.

     

     

     

     

  • Strategy, Not Scarcity: inside the BoG’s US$5,000 gold pivot

    Strategy, Not Scarcity: inside the BoG’s US$5,000 gold pivot

    By Adnan Adams Mohammed

    The Bank of Ghana (BoG), will forever remember the year 2025 as the moment it traded the “glitter” of gold for the “gears” of a diversified economy.

    As global gold prices shattered records, climbing above US$5,200 per ounce, the central bank executed a bold maneuver: liquidating nearly 22 tonnes of its gold reserves to bolster its foreign exchange (FX) coffers. While the move sparked immediate public debate, the data tells a story of clinical precision rather than a crisis response.

    The rationale behind the move is rooted in a fundamental rule of investing: Diversification. By late 2025, Ghana’s aggressive gold-buying program, combined with skyrocketing global prices, had pushed gold’s share of the nation’s Gross International Reserves (GIR) to over 40%. To put that in perspective, most peer central banks maintain a gold “weight” of just 20% to 25%.

    “We observed that most of our peers were holding between 20–25% while we were over 40%,” explained Governor Dr. Johnson Asiama. “The decision was made to diversify.”

    By reducing holdings from 38 tonnes to 18.6 tonnes, the BoG effectively “sold high,” locking in massive gains from the bullion market to strengthen the country’s liquidity position.

    Liquidated, Not Lost

    The most critical point of the BoG’s defense is the distinction between a write-down and liquidation.

    A write-down occurs when an asset loses value and is removed from the books (a loss) whereas liquidation is the act of selling an asset to convert it into another form of value in this case, hard currency.

    The BoG insists that every ounce of gold sold still exists within the national reserves, just in a different “wrapper.” The proceeds have been redeployed into high-quality liquid FX assets and fixed-income instruments. Unlike gold, which sits in a vault and pays no interest, these new assets are actively “gaining dividends” and contributing to the continuous accumulation of reserves.

    Why Now? The “Yield” Factor

    While gold is a “safe haven,” it is a non-yielding asset. It provides security during turmoil but offers no interest payments. By shifting roughly 50% of its gold exposure into FX assets, the BoG has turned a static pile of metal into an active engine of income.

    This income acts as a buffer for the Cedi, supporting the country’s capacity to manage global economic shocks and maintain a stable exchange rate.

    A New Era: “GoldBod”

    The rebalancing act also signals a shift in institutional roles. From January 2026, the BoG is stepping back from the day-to-day “emergency” trading of small-scale gold. This responsibility moves to the Ghana Gold Board (GoldBod), a move designed to shield the central bank from the fiscal risks of commodity trading.

    This allows the BoG to return to its core mandate: Reserve Management. By stripping away the operational “noise” of buying and assaying gold, the Bank can focus on the macro-strategy of keeping Ghana’s financial heart beating.

    The Verdict: Prudence over Pressure

    The numbers don’t lie. Ghana’s Gross International Reserves ended 2025 at US$13.8 billion (5.7 months of import cover), up significantly from US$9.1 billion a year earlier. This growth occurred because of the gold rebalancing, not in spite of it.

    In the high-stakes game of central banking, the Bank of Ghana has chosen to “ride the wave” of record gold prices to build a more liquid, income-generating future. As Governor Asiama puts it, the action reflects “prudence, not pressure.” In a world of US$5,000 gold, sometimes the smartest move is knowing when to take your seat at the table and trade.