How Gov’t Intends to Deal With Cedi Depreciation
The Akufo-Addo-led government is “confident” that its newly carved-out measures will aid in tackling the cedi depreciation the country recently faced.
The measures were outlined by the President during his address to the nation on Sunday, October 30, 2022.
According to the government, these measures are already in place and accounting for the cedi appreciation the country has seen since late last week.
First, he said the country’s Central Bank has deepened its surveillance on the forex market to ensure that forex operators abide by the rules- an action he said has led to the revocation of licences of some operators.
He also disclosed that the Central Bank has pumped dollars into the market to ensure liquidity and address demand.
Additionally, he said, “the Bank of Ghana has given its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy continue to run in a stabilized manner, till the IMF Programme kicks in and the financing assurances expected from other partners also come in”.
Another measure he said the government has adopted is to introduce legislation to ensure that all foreign exchange earned from operations in Ghana is, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market.
Finally, he said the B0G will enhance its gold purchase programme.
Expressing his confidence in the new measures to rein in the cedi depreciation, President Akufo-Addo said the measures will sanitise the foreign exchange market.
“I am confident that these immediate measures designed to change the structure of our balance of payment flows, sanitise the foreign exchange market to ensure that the banks and forex bureaus operate along international best practices, together with strengthened supervision, will go a long way to sanitize our foreign exchange market and make it more resilient against external vulnerabilities going forward.”
As of October 31, the BoG reports that the cedi is trading at Ghc13.0026 per dollar.
Two weeks ago, Bloomberg reported that the Ghana cedi was the worst-performing currency against the dollar globally.
Since the report, the cedi which was then trading at Ghc12 against the dollar steeply depreciated to Ghc15 within 48 hours, shooting up the prices of goods on the market.
During his address, President Akufo-Addo blamed “speculators” for the depreciation.
“The recent turbulence on the financial markets was caused by low inflows of foreign exchange and was made worse in the last two to three weeks, in particular, by the activities of speculators and the Black Market.
“An anonymous two-minute audio message on a WhatsApp platform predicting a so-called haircut on Government bonds sent all of us into banks and forex bureaus to dump our cedis, and, before we knew it, the cedi had depreciated further.”
But his opponents say this excuse of the President exposes his ignorance about the drivers of currency depreciation.
“@NAkufoAddo’s blaming of the Cedi’s depreciation on the circulation of a two-minute anonymous audio on WhatsApp platforms is yet the clearest confirmation of the fact that he is totally clueless about the drivers of our currency depreciation. Bankrupt leadership is what we have!”, Communications Officer of the National Democratic Congress (NDC), Sammy Gyamfi said in a tweet.
The government is determined to act against these “speculators”.
Source: opemsuo.com/Hajara Fuseini
