[ 2019-02-27 ]

BoG justifies dollar support levels for banks
The Bank of Ghana (BoG) has justified the amount
of dollars it releases onto the market to support
operations of commercial banks in the country.

This follows concerns that the limited amount of
dollar cash being released onto the market has
contributed to the cedis’ fast rate of
depreciation over the past weeks.

Concerns by some commercial banks and currency
dealers

Some currency dealers and treasurers have argued
that challenge facing the cedi is supply issue and
if the Bank of Ghana increases the amount of
dollars it releases onto the market then the fast
depreciation of the cedi would be over.

The local currency has witnessed some significant
depreciation selling at GH¢5.51 at the end of
trading on February 25, 2019.

BoG assurances and the outlook for the Ghana cedi


The Central Bank, on the other hand, argued that
they are very active on the market in terms of the
dollar cash support.

The Head of Financial Markets at the Bank of
Ghana, Stephen Opata told JoyBusiness their
supports are influenced by several factors on the
market including, demand for dollars and the
Central Bank’s dollar reserves.

“Therefore we believe that what we are
seeing in the first quarter this year is not
driven by external developments but rather local
sentiments, which we don’t think warrant
significant amount of dollar support in the
system,” he said.

Mr Opata added that their focus now is to build
more Foreign Exchange Reserves for challenges
ahead.

The Bank of Ghana has maintained that the current
challenges facing the local currency does not
reflect the fundamentals of the economy,
especially when all fiscal situation is improving,
especially when for a second year running, the
country is having a trade surplus, and the current
account is also improving.
He is also promising businesses not to panic
because the Bank of Ghana has adequate dollar
reserves to up their support if the need be.

Bank of Ghana on cedis’ outlook

The Head of Financial Markets at the Bank of Ghana
also noted that some fresh measures being
implemented from the beginning of the year to
stabilize the fast rate of the cedis’
depreciation should end very soon.

Mr Opata said these new forex market guidelines,
as well as other interventions they are currently
considering, should help stabilize the Ghana cedi.


Economist and Financial Lecturer Professor Godfred
Bokpin, for instance, has projected that the
current sustained depreciation of the Ghana cedi
would be over by the end of March this year.

Some of the major commercial banks put the
cedi’s rate of depreciation at more than
five per cent for this year.

Source - Joy

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