The Bank of Ghana (BoG) has urged the public to remain calm as it implements measures to arrest the pace at which the cedi loses its value against major foreign currencies.
As part of the measures, the Central Bank said it is increasing foreign currency (FX) supplies to banks in the short term to help meet growing FX demands for external payments.
The apex bank noted that the increased supply of forex was necessitated by growing demand for hard currencies by non-resident investors leaving the jurisdiction.
The central bank added that the high crude oil price has also increased the country’s oil import bill astronomically, forcing the bank to provide more hard currencies to meet demand.
“The strength of the US dollar: The US dollar has become stronger and making other currencies including the Ghana cedi weaker. From the beginning of the year to date, the pound sterling has weakened against the US dollar by 10.8 percent while the Euro has also weakened by 10.1 percent. Countries similar to Ghana (Ghana’s peers) are all experiencing sharp depreciation, averaging 11.5 percent from year to date.”
BoG
The Bank of Ghana disclosed that it is embarking on Gold Purchase Program to increase foreign exchange reserves, which will help meet the demand for the dollar.
“The Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.
“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet demand for external payments.”
BoG
Afrexim Bank to Boost the Foreign Exchange Rate
The Central further noted that the recently approved USD750,000,000 Afriexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.
“The Cocoa Loan is expected in the last quarter of the year. This facility will also help provide more foreign currency to help address the cedi depreciation.”
BoG
BoG expected that in the short term, when the IMF programme is finalized, it will also go a long way to help restore confidence in the economy and drive portfolio flows. “These measures will go a long way to increase the foreign exchange reserve position of the Central Bank,” it indicated.
The note and the assurance from BoG follows public outcry over the steep fall in the value of the cedi recently.
The cedi has depreciated sharply this year as demand for forex overtook supplies at a time when high debts and low investor confidence have made it impossible for the country to access the international capital market for borrowing.
The cedi lost more than 20% of its value as of July. It now trades above GHC9.5 to one US dollar.
This is having a negative impact on the lives of Ghanaians as cost of living keeps increasing. As a result, the Ghana Union of Traders Association (GUTA) and the Association of Ghana Industries (AGI) all came out calling for pragmatic measures to arrest the fall of the cedi, noting that businesses are bleeding from the depreciation.
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