Introduction
In a significant policy move at the start of 2026, the Bank of Ghana announced plans to inject up to one billion dollars into the country’s foreign exchange market. This initiative is part of the Foreign Exchange Intermediation Programme, which aims to enhance market liquidity, stabilize the Ghanaian cedi, and foster transparent interbank foreign exchange operations. The announcement reflects the central bank’s proactive approach to managing currency pressures in a challenging economic and global environment, signaling strong support for both domestic and foreign investors.
Background: Ghana’s Forex Market And Cedi Dynamics
The foreign exchange market in Ghana has faced periods of heightened volatility and pressure over recent years due to a combination of external and domestic factors. Fluctuating commodity prices, global economic uncertainty, shifting capital flows, and seasonal demand surges have all contributed to challenges in maintaining currency stability. The Ghanaian cedi, in particular, has experienced periodic depreciation, which can affect inflation, the cost of imports, and overall economic confidence.
In response, the Bank of Ghana has increasingly engaged in structured interventions to smooth market volatility. The primary objective is not to maintain a fixed exchange rate but to address excessive volatility, provide adequate foreign currency supply, and promote orderly market functioning. These interventions are designed to enhance market confidence and ensure that currency supply aligns with underlying economic demand, creating a more predictable environment for businesses and investors.
The January 2026 Injection Plan: Policy Rationale
The core purpose of the one billion dollar injection in January 2026 is to address liquidity challenges in the foreign exchange market that often become acute at the start of the year. Early-year periods typically see spikes in foreign currency demand driven by import requirements, debt service obligations, and corporate needs. To ensure stability and prevent disorderly currency fluctuations, the Bank of Ghana is stepping in with a structured supply of foreign exchange.
The injection will operate through the Foreign Exchange Intermediation Programme, which distributes foreign currency to licensed commercial banks and market participants via transparent spot auctions. The goal is to provide liquidity without manipulating the exchange rate, ensuring that FX distribution is fair, competitive, and market-neutral. By announcing volumes and scheduling auctions in advance, the Bank fosters transparency and confidence while addressing immediate market needs.
Historical Context: Previous Interventions
This latest plan continues a series of interventions throughout 2025, during which the Bank of Ghana injected significant sums into the forex market to stabilize the cedi. During that period, the Bank sold billions of dollars through spot auctions to meet market demand. These interventions helped strengthen the cedi, reduce volatility, and build confidence among investors and traders.
Funding for these interventions has largely come from the Domestic Gold Purchase Programme, which channels proceeds from gold exports into FX market operations without drawing down the Bank’s official international reserves. This approach ensures that foreign exchange support is sustainable, allowing for both market stabilization and reserve accumulation. As a result, Ghana’s foreign reserves improved significantly over 2025, providing an important buffer against external shocks and currency instability.
Mechanism Of The Intermediation Programme
A key feature of the Bank of Ghana’s strategy is the use of spot auctions to distribute foreign exchange. These auctions are typically held twice a week and are open to all licensed commercial banks, ensuring wide market participation. The process is competitive and market-neutral: banks submit bids for the quantity of foreign currency they need and at the prices they are willing to pay, and the Bank allocates FX based on these bids.
This system prevents favoritism or price manipulation while allowing the central bank to influence liquidity in a structured way. It also promotes transparency, enabling accurate price discovery and fair access for all market participants. By institutionalizing the auction mechanism, the Bank aligns its interventions with international best practices and avoids the distortions associated with discretionary or ad hoc FX sales.
Implications For The Cedi And Macroeconomic Stability
The January 2026 FX injection is expected to support a stable Ghanaian cedi by reducing the risk of sharp depreciation and limiting excessive exchange rate volatility. A well-supplied FX market allows businesses, importers, and investors to operate with greater certainty, which is particularly important in an economy where a significant portion of transactions are linked to foreign currency.
Stable foreign exchange supply also contributes to moderating inflationary pressures, which can rise when the cedi weakens rapidly. By managing liquidity through structured auctions, the Bank of Ghana ensures that supply aligns with genuine market demand, reducing speculative pressures and black-market premiums. Furthermore, stable currency conditions enhance investor confidence, attract foreign investment, and support overall economic growth.
Risks And Criticisms
While the intervention is designed to stabilize the market, some analysts caution that extensive central bank involvement in the forex market can create moral hazard. Market participants may rely on continued intervention rather than adapting to real market conditions, potentially delaying structural reforms that promote a self-sustaining FX market.
There are also concerns about reserve depletion if interventions are excessive or not carefully calibrated. However, proponents note that the Bank’s auction-based, transparent approach mitigates many of these risks by ensuring that interventions are controlled, structured, and aligned with market realities rather than attempting to enforce specific exchange rate targets.
Structural Reforms And Market Development
The FX injection plan coincides with broader efforts by the Bank of Ghana to strengthen the institutional framework of the local foreign exchange market. Recently, new FX brokers and cross-border payment providers were authorized to operate, broadening market participation and improving transparency and efficiency. This initiative helps deepen the market, ensuring that more players can access foreign currency through regulated channels.
In addition, the Bank introduced a new Foreign Exchange Operations Framework, which clarifies objectives, guiding principles, and operational protocols for FX interventions. The framework emphasizes transparency, reserve build-up, and orderly market functioning, providing clear rules for both market participants and regulators. These reforms are essential for building a sustainable FX market where intervention complements market forces rather than substituting for them.
Conclusion
As Ghana enters 2026, the foreign exchange market is likely to remain active, with periodic pressures expected due to imports, debt obligations, and seasonal demand patterns. The January one billion dollar injection positions the Bank of Ghana to provide immediate support while maintaining long-term market credibility.
Going forward, the central bank will monitor market conditions closely and adjust interventions based on demand dynamics, external pressures, and progress in market development. Combined with fiscal discipline, inflation management, and reserve accumulation, the FX injection is part of a broader strategy to ensure sustainable economic stability and growth.