The Foreign Exchange Department of the Bank of Ghana has begun a stakeholder engagement within the business community to ensure that the prices of goods and services are quoted in cedis so as to end the dollarisation phenomenon. The move is part of measures to help curtail the rapid depreciation of the cedi against the US dollar, which has become a perennial canker.
It is also to help enforce the foreign exchange laws of country.
The Advisor to the Governor of the Bank of Ghana, Grace Akrofi, gave hints that the central bank is very much worried about the rate of the depreciation of the local currency, and will ensure it is brought under control.
“In spite of the macroeconomic successes attained so far, the stability in the exchange rate remains a key concern. In most cases, the Ghana cedi had depreciated by a very fast pace against the major international currencies not as a result of economic fundamentals but driven mainly by the sentiments and illicit foreign exchange market practices”, she emphasised at a three-day workshop.
The resultant effect of that, she noted, is the volatility of the exchange rate, which, she noted, significantly impacts market activities.
The Forex Department has, on a number of occasions this year, descended heavily on businesses in the hospitality, manufacturing and retail sectors that have been pricing in dollars. It believes their activities have contributed to the rapid depreciation of the cedi.
So far, the local currency has declined by about 13% in value to the US dollar.
It traded at between US$5.53 and US$5.54 on the interbank market but going for US$5.79 at the forex bureau.
An Economic and Currency Analyst, Courage Martey of the Databank Group, said fiscal weakness remains the major concern to investors as higher borrowing, including increased external obligations, continue to constrain the central bank’s capacity to build up reserves to support the fundamental demand for foreign exchange.
“We really need to pay particular attention to our fiscal challenges because it is a critical issue that is weighing on the Bank of Ghana’s capacity to build and accumulate reserves of foreign exchange”, said Mr Martey.
He, however, expressed confidence about the Governor’s intention to convert a portion of the country’s gold reserves to liquid assets such as foreign currency reserves.
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