a) How does Ghana’s budget deficit explain the movement of the credit in the foreign exchange market?
b) Nigeria has a huge dollar deficit as a result of the plummeting world oil prices. Oil is known to constitute almost 95% of the total export earnings of Nigeria and 75% of their total revenue envelope. It is speculated that, if the Central Bank of Nigeria does not allow the Naira to free fall to reflect the economic fundamentals of the country, it will encourage black market activity with spillover effect for neighboring countries like Ghana. Describe how these developments in Nigeria will affect Ghana’s foreign exchange market and what specific interventions can Bank of Ghana put in place to preserve the market.