The Bank of Ghana (BoG) has enacted a new directive to tighten regulations on the foreign exchange market.

This measure specifically prohibits banks from processing foreign currency (FCY) cash withdrawals for large corporate clients, unless the transaction is backed by an equivalent FCY deposit from the same company.

The central bank identified this growing trend, particularly among bulk oil distributors and mining firms, as a significant drain on foreign exchange liquidity, which has undermined efforts to stabilize the local currency.

In its official statement, the BoG elaborated,

“This practice exerts avoidable pressure on the foreign exchange market and undermines efforts to ensure stability. Accordingly, with immediate effect, all banks are directed to discontinue the payment of FCY cash to large corporates unless such transactions are fully supported by equivalent FCY cash deposits lodged by the same institution. Banks must retain proper documentation to confirm the source of funds for every payout.”

To ensure compliance, the BoG has warned that non-adherence will result in regulatory sanctions. Simultaneously, the Bank assured stakeholders of its continued support for critical sectors like petroleum and mineral exports, noting that government-partnered mechanisms exist to provide forex for legitimate import needs.

The directive is framed as a necessary step to protect the broader market. The release concluded by stating,

“These measures are designed to safeguard market stability while ensuring that vital supply chains remain uninterrupted. We expect all banks to comply strictly with this directive and to cooperate fully with the Bank of Ghana in ensuring that available foreign exchange resources are applied efficiently and transparently. Non-compliance will attract appropriate regulatory sanctions.”

The bigger picture

The Bank of Ghana's decisive move to curtail foreign currency cash withdrawals represents a critical intervention aimed at fortifying the nation's economic defences.

This directive is not merely a restrictive measure but a strategic recalibration designed to safeguard Ghana's forex reserves, bolster the cedi, and promote greater transparency in the financial system.

By targeting specific practices that drain liquidity, the BoG demonstrates a nuanced understanding of the pressures within the foreign exchange market.