Two rates, one currency: The FX reality

By: Confidence AKPLOME

Ghana’s FX market shows two prices for the same dollar. This analysis explores how allocation, liquidity, and policy shape the gap—and what credible unification would require.

The Daily Disconnect

Every morning, a familiar ritual plays out.

A business owner scans the news and sees reports suggesting the cedi is holding steady. The interbank rate is quoted confidently, often framed as reassurance that pressures are easing.

Later in the day, that same business owner needs dollars for an urgent payment. A call to a dealer or a visit to a forex bureau produces a very different quote. The number is higher. Sometimes, materially so.

The confusion is understandable. The same currency appears to be carrying two prices at the same time. What looks like strength in one place feels like weakness in another.

The explanation lies in how Ghana’s FX market functions.

How the Interbank Rate Is Formed

Each morning, the Bank of Ghana publishes an interbank reference rate derived from a weighted average of FX trades executed between banks on the previous trading day.

These transactions tend to share common features. They are relatively large, well-documented, and conducted between institutions and clients with established access. In many cases, deal sizes exceed $10,000 and relate to priority obligations or structured flows.

The rate therefore captures where transactions are cleared under specific conditions, using yesterday’s liquidity and approvals. It is a valid statistical measure. As well as an incomplete reflection of current access.

Availability, Access, and the Question of Execution

For many users, the challenge is not the quoted price but the ability to transact at that price.

Banks operate within allocation limits, eligibility criteria, and approval processes that shape how much FX can be released on a given day. When supply tightens, the interbank rate remains visible even when execution becomes uncertain.

In that environment, the reference rate functions less as a transaction price and more as a signal. It tells the market what cleared previously, not what can necessarily be obtained immediately.

Where demand goes when it cannot wait

FX demand that cannot be accommodated within the banking system does not disappear simply because demand was unmet.

It moves toward channels designed to resolve urgency, the parallel market. This exists to settle payments that are time-sensitive, documentation-heavy, or outside defined priority lists. Its pricing adjusts continuously, responding to availability, sentiment, and expectations around future inflows. Rates are updated frequently because conditions change frequently. What matters is not yesterday’s rate, but the ability to deliver now.

For many participants, this market provides certainty of settlement, even when the cost is higher.

 

How the spread evolved over time

Around 2023, the market operated with a high degree of directional symmetry. The spread averaged Ghs 0.92 with a volatility of 8.3% (fig 2). During this phase, the interbank and bureau rates moved like a tethered pair. When the official rate shifted, the alternative market followed with a predictable lag. For the business owner, this was a liquidity premium representing the manageable cost of immediate access to FX on the parallel market. Planning was possible because the rates moved in a predictable range.

However, by 2025, this symmetry fractured as the bureau rate started reacting to sentiment and episodic supply shocks independent of official movements. The annual average spread widened to approximately Ghs1.13 (a 9.78% volatility). As FX access became more conditional, the market experienced sharp liquidity shocks. In June 2025, the monthly average spread surged to Ghs 1.82 and eventually peaked as high as Ghs 2.38with a 23% volatility. (fig 2) This high spread reflected a supply-demand mismatch that the official interbank system could not satisfy.

While the 8.3% figure in 2023 represented a period where risk was largely contained, the current environment suggests that even when the exchange rate appears stable, the spread itself remains volatile. This introduces a critical nuance for businesses. In 2023, a firm could hedge its risk by watching the official rate. Today, businesses must hedge against Spread Risk where the cost of obtaining dollars can spike by 20% in a single week even if the official rate stays flat.

Looking at the most recent data from early 2026, we see this reality hardening into a two-tier liquidity structure. The gap has reached a new higher plateau averaging approximately Ghs1.64 with recent peaks around Ghs 1.84. While the interbank market operates on price discovery focused on long term fundamentals, the alternative market has become the sole provider of immediate liquidity for the retail sector and SMEs who cannot wait for official auction cycles or even access forex directly from commercial banks.

Fig 1

 

Fig 2

 

 

Policy Frictions and Demand Reallocation

Policy choices shape how FX demand is distributed across the system.

In August 2025, the Bank of Ghana issued Directive BG/GOV/SEC/2025/24, restricting banks from paying foreign currency cash to large corporates unless funded by their own deposits. At the same time, FX support for selected non-essential imports has remained withdrawn. These measures were designed to preserve reserves and prioritize allocation. Their practical effect has been to redirect demand toward channels capable of immediate settlement.

Approval delays, uneven liquidity across banks, episodic interventions, and the signaling effects of administrative controls further influence behavior. Demand adjusts to pathways that offer certainty, even when pricing is less favorable.

Behavioral and Economic Effects

As the FX spread widens, pricing behavior shifts in predictable ways. Businesses stop referencing the official rate and instead price goods based on expected replacement cost, embedding depreciation risk directly into prices. This quietly fuels inflation even when headline rates appear stable.

FX inflows become selective. Exporters, remitters, and investors increasingly delay or reroute inflows, prioritizing certainty of conversion over speed. Formal channels lose volume not because of capital flight, but because the pricing signal is distorted.

The market also begins to reward access rather than productivity. This creates scope for rent-seeking behavior, where firms and individuals with preferential or timely access to foreign currency gain transactional advantages, while others absorb higher costs. Over time, this skews investment decisions, weakens planning horizons, and reduces confidence in price signals.

These costs rarely make headlines. They surface instead in shortened contracts, higher risk premium, and everyday pricing decisions that slowly erode economic efficiency.

What Egypt and Nigeria Did to Close the Gap

African FX unification has worked when authorities addressed access and liquidity together.

In Nigeria, before reforms in 2023, the official rate traded around ?460 – ?480 while the parallel market hovered near ?750 – ?800. Multiple FX windows and preferential access sustained a premium of over 60 percent.

In June 2023, authorities collapsed these windows into a single willing buyer, willing seller framework. Banks were allowed to quote rates based on supply, and FX demand was routed through one platform. The Naira adjusted sharply, but arbitrage opportunities narrowed immediately. As access normalized, the parallel premium compressed, not because the currency strengthened, but because segmentation ended.

Egypt faced a different constraint. By early 2024, the official rate was around EGP 30 while the parallel market exceeded EGP 50. FX backlogs had accumulated across imports and profit repatriation. In March 2024, Egypt unified its rate near market-clearing levels and paired the move with a $35bn UAE investment package alongside multilateral support. Banks were provided with liquidity to clear pending obligations. Import backlogs were unwound. The parallel market premium collapsed rapidly because FX became available at the quoted rate.

In both cases, unification succeeded by changing how dollars were accessed and ensuring the capacity to meet suppressed demand.

What This Means for Ghana

Ghana has already initiated several strategic pillars of FX unification, focusing on structural reserve management and demand-side controls. These measures include the Gold-for-Oil and Gold-for-Reserves programs, stricter export repatriation requirements, and administrative directives aimed at curbing speculative cash usage. However, despite these efforts, FX demand remains highly fragmented. Because liquidity support is often episodic rather than continuous, the interbank rate frequently serves as a mere benchmark, while the alternative market performs the actual clearing function for many businesses. This divide persists not due to market confusion, but because access to foreign exchange remains partitioned across priority lists and discretionary approvals.

Achieving true unification requires moving beyond shifting pressure and instead allowing suppressed demand to surface within a transparent, formal system supported by credible liquidity. In the short term, this transition would likely trigger exchange rate adjustments and volatility as the price begins to reflect delayed market information and clearing realities. However, the long-term benefits are substantial: a single, executable rate reduces arbitrage incentives, simplifies corporate planning, and encourages FX inflows to return to official banking channels. Ultimately, the spread between the two markets will only narrow when the official rate becomes the primary venue where transactions are settled, rather than just quoted.

The author is a finance and policy analyst with experience in tax, corporate finance, and operational compliance. His work focuses on how fiscal reforms and financing structures shape firm-level outcomes in development finance

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