WHAT IS FX INTERVENTION?
FX intervention happens when the central bank sells foreign currency to:
- Stabilize the cedi
- Meet import demand
- Calm market volatility
THE SIMPLE FORMULA
FX Intervention = FX Inflows – Change in Reserves
If inflows are big but reserves rise only a little, the rest was sold into the market
WHAT HAPPENED TO RESERVES?
Ghana’s reserves moved as follows:
- Dec 2024: US$9.11bn
- Mar 2025: US$10.30bn
- Jun 2025: US$11.34bn
- Sep 2025: US$11.60bn
- Oct 2025: US$11.41bn
Net increase: US$2.30bn
EXPORTS BROUGHT IN BIG FX
Total exports (Jan–Oct 2025): US$23.33bn
- Gold: US$15.25bn
- Cocoa: US$2.82bn
- Oil: US$2.20bn
- Others: US$3.06bn
REMITTANCES & CAPITAL FLOWS
- Private transfers (remittances): ≈ US$6.5bn
- Net financial inflows (excl. reserves): ≈ US$1.92bn
TOTAL FX INFLOWS
Add everything together:
US$23.33bn + US$6.50bn + US$1.92bn
= US$31.75bn
This is the FX Ghana earned in 2025 (Jan–Oct).
IMPORTS MUST BE PAID
Total imports (Jan–Oct 2025): US$14.80bn
- Oil imports: US$4.40bn
- Non-oil imports: US$10.40bn
FX LEFT AFTER IMPORTS
US$31.75bn – US$14.80bn
= US$16.95bn
This surplus could only:
- Build reserves, or
- Be sold into the FX market
BUT RESERVES ROSE BY ONLY…
Reserves increased by just US$2.30bn
So where did the rest go?
US$16.95bn – US$2.30bn
= US$14.65bn sold into the market
ADJUSTING THE NUMBERS
Not all FX can be used freely due to:
- Encumbered assets
- Gold price revaluation
- Petroleum & heritage funds
A standard 30–35% adjustment applies.
THE FINAL ESTIMATE
US$14.65bn × 0.68
= US$9.96bn
Estimated FX intervention: ≈ US$10 billion
DOES THE EXCHANGE RATE AGREE?
USD/GHS movement:
- Jan 2025: 15.30
- May 2025: 10.28
- Jul 2025: 10.50
- Sep 2025: 12.42
That’s a 33–43% appreciation.
WHY THIS MATTERS
Such appreciation cannot happen:
- With weak portfolio inflows
- Without capital account liberalization
- Without massive FX supply
This was intervention, not market magic
FINALLY
Ghana earned strong FX in 2025
But instead of saving it all, about US$10 billion was used to stabilize the cedi. Short-term stability came at a big cost.
Author:
Prof. Isaac Boadi
Dean, Faculty of Accounting and Finance, UPSA
Executive Director, Institute of Economic and Research Policy, IERPP