The Foreign Exchange Market and the Dutch Auction System in Ghana

"The main objective of this paper is to present an account of the nature and working of the foreign exchange market and the Dutch auction arrangement in Ghana from the inception of the ERP in 1983 up to the first quarter of 1991. Before examining and analyzing the foreign exchange market in Ghana, it is necessary to outline a general theoretical framework within which Ghana is considered a special case. Then the exchange rate policy is discussed that was in existence before the adoption of ERP in 1983, and follow this with an exposition, in Section II, of the multiple exchange rate system from April 1983 to January 1986. Section III describes the operation of the dual exchange regime in a retail auction market based on DAS, and then discusses the DAS arrangement prior to the establishment of foreign exchange bureaux in April 1988 and Section IV deals with their merger with the auction market. In Section V, the wholesale and interbank auction systems in Ghana are highlighted. The paper ends with a brief evaluation and a research agenda."