Bank of Ghana Plans $1.15bn FX Intermediation Advertisement in October 2025

Introduction

Overview of the Domestic Gold Purchase Programme

The Bank of Ghana (BoG) has announced plans to advertise up to $1.15 billion in foreign exchange (FX) intermediation services for October 2025 under its Domestic Gold Purchase Programme (DGPP). This initiative, central to Ghana’s monetary policy, aims to stabilize the cedi and strengthen the interbank FX market through structured spot auctions.

Key Objectives of the Announcement

Released ahead of the October deadline, the programme seeks to deepen market liquidity, enhance price discovery, and mitigate currency volatility. Governor Dr. Johnson Pandit Asiama emphasized transparency, stating, “Our goal is to ensure equitable access to foreign currency for licensed banks while aligning with global best practices.”

Analysis

Market Implications of the $1.15bn Plan

By opening advance transactions to all chartered banks via twice-weekly auctions, the BoG aims to reduce reliance on informal forex markets. This move addresses Ghana’s persistent current account deficits and cedi depreciation by prioritizing systemic stability over short-term gains.

Structural Reforms in Banking

The BoG has introduced three pivotal directives: the Bancassurance Directive to integrate insurance services with commercial banks, the Large Exposures Directive to limit lending risks, and the Credit Concentration Risk Management Guidelines to diversify portfolios. These reforms aim to bolster resilience against economic shocks.

Capital Adequacy and Non-Performing Loans (NPLs)

As of October 2025, Ghana’s banking sector reports a Capital Adequacy Ratio (CAR) of 17.7%, reflecting improved solvency. However, NPLs remain at 20.8%, underscoring the need for ongoing vigilance. The extended outsourcing directive, valid until December 2025, defers compliance deadlines for banks to transition risk management legacy systems.

Summary

The Bank of Ghana’s $1.15bn FX intermediation plan underscores its commitment to revitalizing the domestic currency and strengthening institutional frameworks. Through voluntary auctions and regulatory overhauls, the central bank balances market needs with systemic risk management.

Key Points

Practical Advice for Banks

Strategies for Optimizing Bid Outcomes

Banks should:

• Analyze historical exchange rate trends to determine competitive pricing.
• Collaborate with central banks of gold-producing nations to secure pricing partnerships.
• Enhance digital infrastructure to meet bid submission deadlines efficiently.

Compliance Priorities Post-Extension

Financial institutions must:

1. Conduct internal audits to align outsourcing contracts with the updated directive.
2. Implement robust credit risk assessments by Q1 2026.
3. Train staff on Bancassurance licensing requirements.

Points of Caution

Market Volatility Management

While the BoG assures price discovery, sudden shifts in global oil prices or commodity exports could still pressure the cedi. Banks should hedge forex exposures accordingly.

Risk of Codependency

Over-reliance on advance transactions may stifle innovation in foreign exchange trading platforms. Diversification into digital currencies deserves consideration.

Comparison: Similar Initiatives in Africa

Kenya’s FX Market Stabilization (2024)

Kenya’s Central Bank introduced biweekly auctions in 2024, achieving a 12% reduction in FX liquidity gaps. Lessons from Nairobi’s model highlight the importance of stakeholder coordination.

Nigeria’s FX Reconciliation Fund

In contrast to Ghana’s proactive approach, Nigeria’s $23bn buffer stock has faced delays due to bureaucratic inefficiencies, underscoring the need for agile governance.

Legal Implications

Enforcement of New Directives

Non-compliance with the Credit Concentration Risk Management Guidelines may result in penalties up to GHC 100,000 per instance, per the Financial Institutions Act 2016.

Impact on Insurance Underwriting

The Bancassurance Directive mandates insurers to share claims data with banks, raising data privacy concerns that regulators must address to avoid litigation.

Conclusion

The Bank of Ghana’s dual focus on liquidity enhancement and regulatory modernization aims to future-proof the economy. However, sustained commitment to transparency and adaptive risk frameworks is critical for long-term success.

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