In a bid to enhance accuracy and transparency in Ghana’s foreign exchange market, the Bank of Ghana (BoG) has announced a new methodology for computing its Foreign Exchange Market Reference Rate (MRR).
This move aligns with international best practices and is the first step in the Bank’s long-term strategy to adhere to the International Organization of Securities Commissions (IOSCO) Principles of Financial Benchmarks.
The previous methodology relied on a daily survey of exchange rates from a selected group of commercial banks. However, this approach had limitations, including narrow data coverage, lack of transparency, and inaccurate representation of market conditions.
To address these concerns, the central bank has introduced a more comprehensive and transparent methodology. The new approach considers daily transactions between commercial banks and their clients, reflecting market developments more accurately.
The new methodology will provide a more reliable and representative exchange rate, benefiting businesses, investors, and individuals involved in foreign exchange transactions.
For businesses, the new methodology means increased predictability and stability in foreign exchange transactions. This will enable companies to better manage currency risks, make informed investment decisions, and enhance their competitiveness in the global market.
Additionally, the improved transparency could attract foreign investors, boost trade, and contribute to Ghana’s economic growth.
Here’s how the new methodology works: The Bank of Ghana will compute the reference rate from data submitted by all banks, covering spot transactions on interbank markets and client transactions exceeding US$10,000.
The weighted median exchange rate will be published daily on the Bank of Ghana website as the closing rate for the day’s transactions.
