Ghana’s currency, the Cedi, has crossed ¢10 per dollar mark as at Friday August 19.
It now trades at ¢10.01 per dollar in some forex bureau.
The Bank of Ghana (BoG) in a statement called for calm as it has introduced measures to resolve the fall of the Cedi. The BoG has identified five key reasons for the woes of the local currency.
These are “The strength of the US dollar, Investor reaction to Credit Rating Downgrade, Non-Roll over of Maturing Bonds, The sharp rise in crude oil prices and impact on the Oil Bill, Loss of External Financing.”
The measures introduced to resolve these, according to the BoG, are the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products; 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 the demand for external payments. 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. In the short term, we expect that when the IMF programme is finalized, it will also go a long way to help restore confidence in the economy and drive portfolio flows.”
A Professor of Applied Economics at the Johns Hopkins University, Steve Hanke also suggested to the Government of Ghana to create a currency board as part of moves to stabilize the Cedi against the major trading currencies especially the dollar.
He placed Ghana’s currency 15th among a list of nineteen performing currencies.
In a tweet, Prof Hanke said “By my calculations, the Ghanaian Cedi has depreciated 34.17% against the USD since Jan. 2020, which is why Ghana is in 15th place in this week’s Hanke’s #Currency Watchlist.
“To save the cedi,” he said, “Ghana must mothball its central bank and install a #CurrencyBoard.”
He added Ghana takes the 10th place in this week’s inflation table. On August 4, I measured Ghana’s inflation at a stunning 58%/yr-almost 2x the official inflation rate of 30%/yr. Ghana must mothball its central bank and install a Currency Board.”
Credit:3newsonline
