TITLE:
The Development and Determinants of Foreign Exchange Market in Ghana
AUTHORS:
Mavis Adjei, Bo Yu, Emmanuel Nketiah
KEYWORDS:
Real Exchange Rate, Inflation, Trade Openness, Political Stability, Government Public Debt, Term of Trade, Gross Domestic Product
JOURNAL NAME:
Open Journal of Business and Management,
Vol.7 No.4,
September
30,
2019
ABSTRACT: This study seeks to examine the determinants of real exchange rate and
its overall performance on Ghanaians economy from 1998 to 2016. The study
extracted secondary data from the World Development Indicators (WDI) of the
World Bank and Bank of Ghana (BoG) websites respectively. The following
variables, namely trade openness, public debt, inflation, terms of trade, political
stability were used as an independent variable while real exchange rate was the
dependent variable. Simple linear regression model with ordinary least method
(OLS), was used to analyze the results. The study revealed that trade openness
and GDP are the main factors affecting exchange rate in Ghana. Also, the study finds that public
debt, terms of trade, political stability had impact but were not statistically significant on real exchange rate. This study
recommends Bank of Ghana put efforts to harmonize monetary policies and then
proceed to connect these policies with trade and economic growth policies.