The Bank of Ghana (BoG) has disclosed, it will pump at least $800 million to the country’s reserves this month to stabilise the cedi against its major international currencies, especially the dollar.
The cedi has been witnessing a sharp decline against the international currencies, particularly, the dollar and has raised concern among the business community, and traders in general. The daily Interbank FX Rates by the Bank of Ghana pegs the cedi at a buying price of 5.1976 and a selling price of 5.2028 U.S Dollar.
For the British Pound Sterling, the cedi stands at a buying price of 6.8562 and a selling price of 6.8651, the Swiss Franc is being bought at 5.1948 and sold at 5.1996 against the cedi while the Euro is buying at 5.8851 at selling at 5.8898 against the cedi, respectively. It is against this depreciation that the BoG is injecting the $800 million for its stability.
Meanwhile, the Head of Financial Markets at the Central Bank, Steven Opata, has told the Daily Graphic that, the accumulation of more dollars would help increase the Net International Reserve (NIR) to around $4 billion, enough to provide confidence in the system and help stabilise the free fall of the local currency.
He says, in order to arrest the situation, the BoG has adopted a number of mechanisms, one of which is, “rebuilding reserves to face more systemic shocks that may come”.
Since January this year, data from the Central Bank indicates that the cedi has lost some 3.6 per cent of its value to the US dollar as the international investor community sold some of their investments in local securities and moved their funds overseas, partly causing the cedi to slide.
He has however expressed confidence in seeing the cedi bounce back againts itsd major trading currencies. “I am very optimistic that it will not be long before we see stability and some recovery in the cedi,” he said.
He went on to explain that, the BoG research indicated that the recent depreciation would normalise in days, as it was not caused by weak fundamentals and external shocks but by local sentiments that tended to correct with time.
“In this first quarter, the movement in the cedi is not caused by external factors because the external sector has been quiet,” he said, citing recent signals by the Federal Reserve (Fed) of the United States of America that it would be increasing its rates, a situation that usually negatively affected the currencies of emerging and frontier markets such as Ghana.
Last year, the central bank used about $560 million to support the cedi against shocks and that saw the net international reserves declining to $3.8 billion in December last year.
Speaking at the commissioning of the Fujian Sentuo Ceramics Company at Kpone in Accra, last Wednesday, president Akufo Addo expressed worry over the currency’s depreciation and said, he is “extremely upset and anxious about it too”.
He however assured that, all efforts are being made to arrest the decline and restore the cedi to stability, in order to improve the competitiveness of Ghanaian industry. He stated that, “Very soon we will be seeing the results of our policy:.