Bank of Ghana’s $1.4 Billion Forex Market Intervention in Q1 2025: Implications for Currency Stability and Policy Transparency

In the first quarter of 2025, the Bank of Ghana undertook an unprecedented scale of foreign exchange market intervention, injecting $1.4 billion into the currency markets. This aggressive deployment of foreign reserves contributed significantly to the Ghanaian cedi’s robust appreciation and shored up the country’s external buffers during a period marked by global economic uncertainty. Yet, the International Monetary Fund (IMF) has urged the central bank to recalibrate its approach, advocating for reduced discretionary interventions and greater transparency through a formalized framework. This article explores the size and impact of Ghana’s forex operations, the IMF’s policy recommendations, and the strategic risks facing the nation’s currency and reserves.

Bank of Ghana’s headquarters in Accra, central to the country’s forex market operations.

Unprecedented Scale of Forex Intervention

According to the latest IMF review published in mid-2025, the Bank of Ghana’s sale of $1.4 billion in foreign currency during Q1 2025 represents a dramatic increase in market activity relative to previous years. If current trends persist, the central bank could offload as much as $5.6 billion by the end of 2025—almost double the $2.8 billion recorded in 2024. This escalation reflects the Bank’s determination to support the local currency amid external shocks and capital flow volatility.

This level of intervention is notable in both absolute and relative terms. For a developing economy like Ghana’s, such sustained engagement in the FX market is indicative of a proactive policy stance aimed at stabilizing the cedi and ensuring orderly market conditions.

Currency Appreciation and Reserve Accumulation

Since opening 2025 at a rate of 14.7 cedis per USD, the Ghanaian cedi has appreciated sharply, trading near 10.37 by mid-year. This performance positions the cedi as the best-performing currency globally in 2025, a remarkable turnaround driven in large part by the Bank’s sustained market support.

Concurrently, Ghana’s gross international reserves have surged to $10.6 billion, the equivalent of 4.7 months of import cover—a comfortable buffer by international standards. The reserve accumulation owes much to continued strong inflows from commodity exports, especially gold and cocoa, alongside improved remittance flows. The Bank’s domestic gold purchase program has further bolstered foreign currency liquidity.

Ghana’s foreign exchange reserves have expanded significantly, providing a robust shield against external shocks.

IMF Calls for a Rules-Based, Transparent Intervention Framework

Despite these encouraging developments, the IMF has counseled a strategic shift away from heavy discretionary intervention toward a more flexible and transparent exchange rate regime. The Fund’s assessment highlights the benefits of a formalized internal intervention policy that would enhance market predictability and investor confidence.

Such a framework would involve clearly defined rules governing when and how the Bank intervenes, reducing operational discretion that can generate uncertainty and misaligned expectations. The Fund’s recommendations emphasize anchoring market behavior by signaling policy intentions more effectively, thereby supporting the cedi’s stability without excessive reserve drawdowns.

The IMF’s position reflects broader global trends favoring flexible exchange rate regimes complemented by targeted intervention during episodes of excessive volatility rather than continuous market engagement.

Risks of Heavy Reliance on Commodity-Driven Inflows

While Ghana’s current forex position is supported by elevated commodity prices—particularly gold, which remains buoyant in 2025—this reliance introduces vulnerabilities. Commodity markets are inherently volatile and susceptible to global demand shifts, geopolitical tensions, and inflationary pressures.

A sudden reversal in gold or cocoa prices could rapidly weaken inflows, pressuring reserves and triggering depreciation cycles. Moreover, external shocks such as tightening global financial conditions or adverse geopolitical events could exacerbate capital flight risks.

Fiscal prudence and monetary discipline have thus far mitigated these risks, but the absence of a rules-based intervention mechanism could expose the economy to episodic shocks and market uncertainty.

Ghana’s commodity exports, especially gold, underpin much of the foreign exchange inflows supporting the cedi.

Strategic Implications for Ghana’s Macroeconomic Policy

The Bank of Ghana’s approach to forex market management in early 2025 underscores the delicate balance emerging economies must strike between exchange rate stability and monetary policy flexibility. The current intervention stance has delivered tangible benefits in currency stabilization and reserve accumulation, yet it risks depleting precious reserves if maintained without clear operational guardrails.

Transitioning to a more rules-based intervention policy, as advocated by the IMF, could improve transparency and market discipline, thereby enhancing the cost-effectiveness of reserves usage. Additionally, reinforcing structural reforms to diversify export revenues and deepen domestic capital markets will reduce external vulnerabilities.

Maintaining a credible policy framework is critical to sustaining investor confidence, managing inflation pressures, and supporting Ghana’s growth trajectory amid a complex global backdrop.

The Ghanaian cedi’s significant appreciation in 2025 highlights the impact of active market intervention and favorable commodity dynamics.

Conclusion

The Bank of Ghana’s $1.4 billion foreign exchange intervention in Q1 2025 has been a pivotal factor in the Ghanaian cedi’s remarkable appreciation and the strengthening of foreign reserves. This aggressive market posture has provided a vital cushion against external volatility, enabling Ghana to navigate a challenging economic environment with relative resilience.

However, the IMF’s call for reduced intervention and the establishment of a transparent, rules-based intervention framework signals an important inflection point. To safeguard the sustainability of currency stability and reserve adequacy, Ghana must adopt clearer operational guidelines and prepare for scenarios where commodity windfalls may not provide sufficient support.

Looking ahead, coupled with continued fiscal discipline and structural reforms, an enhanced framework for forex market management will be essential in anchoring macroeconomic stability and fostering long-term growth.

References:

• Bank of Ghana intervened with $1.4bn in the forex market in 2025 first quarter - MyJoyOnline
• Reduce interventions in the forex market – IMF to Bank of Ghana - MyJoyOnline

Keywords: Bank of Ghana, forex intervention, Ghanaian cedi, foreign exchange reserves, IMF, exchange rate flexibility, commodity inflows, currency stability, macroeconomic policy