The Bank of Ghana (BoG) has moved to assure the business community and the general public that the recent turbulence surrounding the Ghana cedi is temporary and not a sign of a looming crisis.
According to the Governor of the Bank of Ghana, Dr. Johnson Asiama, the pressure the local currency is currently facing is nothing more than a short-term “blip,” which will soon normalise due to corrective measures already being enforced.
Over the past month, the cedi has come under considerable strain against the US dollar, sparking concerns across business and financial circles. The local currency, which traded at around GHS 10.40 to a dollar earlier, has depreciated to over GHS 11 at some commercial banks, raising fears of further decline. Market watchers attributed the situation to a limited supply of dollars, with speculation growing that Ghana may be running out of foreign exchange reserves to support the currency.
Dr. Asiama, however, dismissed these fears, insisting that the central bank has more than enough reserves to meet market demands. He cautioned against misrepresentations in the market, stressing that some of the currency’s pressure was being driven by speculation and bad trading practices rather than economic fundamentals.
Describing the turbulence as a temporary “cash flow problem,” Dr. Asiama stressed that the BoG operates a managed floating exchange rate system, which naturally allows for occasional fluctuations. “These blips will happen, but the assurance is that this is a short-term issue, and the challenges are being addressed,” he explained.
He further argued that the recent appreciation of the cedi earlier this year had made imports cheaper, driving up sudden demand pressures. This, he noted, contributed to the recent depreciation but does not represent any structural weakness in Ghana’s economy. “The current macroeconomic situation is sound and solid, and this will reflect in the cedi’s performance going forward,” he assured.
Regulatory Interventions to Protect the Cedi
The BoG governor disclosed that the central bank has already taken decisive actions to stabilise the currency. Among these measures are tightening loopholes in the foreign exchange market, particularly in the remittances sector. He revealed that some remittance companies had been offshoring foreign exchange instead of bringing it into the local market, a practice that weakened the cedi.
“Some payment service providers have also experimented with offshore settlement models and even cryptocurrencies. While innovation is welcomed, such practices must not weaken the cedi, and we will regulate these activities within the law.”
Dr. Johnson Asiama
Additionally, the Bank has scaled back on forward dollar auctions in recent months, opting instead to strengthen the interbank market to function more efficiently. According to Dr. Asiama, the interbank system should ideally regulate itself through inflows from trade and remittances rather than overreliance on central bank interventions.
The governor stressed that Ghana’s ongoing International Monetary Fund (IMF) programme has provided the country with a strong foundation for macroeconomic stability. By keeping a close watch on reserves and fiscal discipline, the BoG believes the cedi’s current challenges will be short-lived.
“So we can be assured that as far as the IMF programme is concerned and Ghana’s reserves, we are okay,” Dr. Asiama stated. He emphasised that the Bank of Ghana remains committed to market stability but cautioned that its role is to support, not dominate, the foreign exchange market.
Meanwhile, the BoG governor expressed optimism about the cedi’s recovery. He reiterated that the interventions put in place would soon ease demand pressures and restore confidence in the local currency. He urged businesses and market participants to avoid panic reactions, as the fundamentals of the economy remain strong.
“We are not running out of dollars. The gap between market rates and official rates is being driven by bad practices, and we are correcting them. Liquidity will improve, and the interbank market will function adequately to bring stability.”
Dr. Johnson Asiama
While the recent depreciation of the cedi has caused anxiety among businesses and the general public, the Bank of Ghana maintains that the turbulence is only temporary. With regulatory interventions, improved inflows, and sound macroeconomic policies underpinned by IMF support, the central bank is confident that the cedi will bounce back soon.
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