Accra: Professor Godfred Bokpin of the University of Ghana Business School has highlighted that the Bank of Ghana's 'excessive' intervention in the foreign exchange market is contributing to the presence of multiple exchange rates. He pointed out that this intervention has led to a significant discrepancy between the interbank exchange rates and the rates provided by foreign exchange bureaux.
According to Ghana News Agency, Prof. Bokpin raised these concerns during an exclusive interview with JoyNews. His remarks came in response to a recent caution from the International Monetary Fund to Ghana's Central Bank about its role in the foreign exchange market. Prof. Bokpin explained that while demand and supply should ideally determine exchange rates, the Bank of Ghana's dual function as both a regulator and a market participant distorts this balance.
Prof. Bokpin elaborated on the situation, stating that the Bank of Ghana has a dominant influence over exchange rates and their market implications. He noted that the Central Bank's intervention results in significant rate differentials. For example, selling dollars at the bank level may yield rates of around 10.1 or even 9.8, whereas rates at forex bureaux show a differential of up to 20 percent, and in some cases, close to 25 percent.
He further highlighted that the percentage rate difference between the interbank rate and the forex bureaux rate is approximately 35 percent. Prof. Bokpin stressed the importance of building market confidence, indicating that if market players trust that the rates are aligned with true value, they would not resort to alternative channels for foreign exchange transactions.
