Bank of Ghana Bars Long Currency Positions as Revised Directive Tightens Foreign Exchange Reporting

The Bank of Ghana (BoG) has issued a revised directive on Net Open Position (NOP) limits, significantly tightening the regulations governing how commercial banks manage their foreign currency exposures. Under the new rules, banks are strictly prohibited from holding long positions in major foreign currencies, including the British pound and the euro. The central bank has set the Single Currency Position limit for each individual currency to range from 0% to -10% of a bank's Net Own Funds (NOF), effectively mandating that positions at the close of business must be either squared or held in a short position.

To ensure strict adherence to these limits, authorized dealer banks must now reconcile daily changes in their NOP with their actual net foreign exchange trades. This calculation is defined as the total foreign exchange purchases minus total sales for the day. Notably, the directive specifies that contingent liabilities are to be excluded from these daily reconciliations. Furthermore, in transactions involving partial margins in foreign currencies, the regulator has clarified that only the net exposure will be accounted for in the NOP computation, providing a standardized framework for reporting complex currency dealings.

The Bank of Ghana has emphasized the criticality of timely and accurate reporting to maintain market transparency and financial stability. All banks are required to submit their Daily Bank Returns (DBK) by 10:00 a.m. on the following business day. The central bank has issued a stern warning that any inaccurate, incomplete, or late submissions will attract severe sanctions under the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930) and other relevant regulatory frameworks. This move is widely seen as an effort to curb speculative activities and ensure greater oversight within the national foreign exchange market.