Skip to main content

BoG gives assurance cedi’s stability will be restored


The Bank of Ghana has given strong indication that the recently approved $750 million Afriexim loan facility by Parliament once disbursed, among other measures, will boost the foreign exchange position of the country and help restore confidence in the cedi.

The additional measures include the cocoa syndication loan which is expected in the last quarter of 2022 and expected to provide more foreign currency to help address the cedi depreciation, the Gold Purchase Programme to increase foreign exchange reserves and the Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products.

The rest are a cooperation agreement with the mining companies to provide the Central Bank with the opportunity to buy gold as when it becomes available and foreign currency liquidity support to the banking sector to help meet demand for external payments.

In the short term, the Central Bank said “we expect that when the International Monetary Fund programme is finaliSed, it will also go a long way to help restore confidence in the economy and drive portfolio flows.

These measures will go a long way to increase the foreign exchange reserve position of the Central Bank”, it added.

Reasons for depreciation of the currency so far in 2022

The Bank of Ghana attributed it to the strength of the US dollar, adding, the US dollar has become stronger and making other currencies including the Ghana cedi weaker.

It added that from the beginning of the year to date, the pound sterling has weakened against the US dollar by 10.8%, while the Euro has also weakened by 10.1%.

Secondly, it pointed out that the investor reaction to Credit Rating Downgrade has affected the cedi.

When they decide to leave, the Central Bank has to provide dollars for them to exit the bond market and this exerts enormous pressure on reserves, causing the cedi to depreciate”.

Again, the Central Bank attributed the depreciating cedi to the non-roll over of maturing bonds

It said these bonds are held in local currencies and a decision by the non-residents not to roll over results in the Central Bank providing for dollars to help externalize these funds, a situation which puts pressure on the currency.

Historically, non-resident rollover of maturing bonds, held by non-residents have been in excess of 80%, but the figure this year is much lower. This has added another layer of demand pressure from non-residents and hence causing the cedi to depreciate.

Furthermore, it said the sharp rise in crude oil prices and impact on the oil bill also have an impact on the cedi.

International price of crude oil has risen significantly in the year. What this means is that our crude oil and petroleum product bill has gone up significantly. The import bill for oil and oil products has led to a reduction in trade surplus”.

It added, the Central Bank, is providing more dollars for the country’s oil import bill and this has had an adverse impact on the its reserves.

Finally, it mentioned the loss of external financing, saying “with ratings agency downgrade, Ghana was not able to tap the Eurobond market. Over the past three years, Ghana has consistently raised $3 billion from the Eurobond market to help finance the budget. Loss of market access this year implies that no new fresh injection of capital and this has created a huge FX [foreign exchange] supply problem and constrained the ability of the Central Bank to provide for greater support for the currency.”

It added that the intervention data shows that the Bank of Ghana’s presence in the market this year so far has been lower compared to 2021.

The cedi has so far this year lost about 29% value to the US dollar.

It is presently selling at ¢9.70 to the dollar on the retail market.

Comments

Popular posts from this blog

Nestlé Ghana Limited Wins Overall Best Industrial Company Of The Year at 13th AGI Industry & Quality Awards

  Nestlé Ghana Limited has been honored with four prestigious awards at the 13th Association of Ghana Industry and Quality Awards ceremony. The event, held in an esteemed setting, gathered prominent figures from Ghana’s industrial sector. Amidst the anticipation, Nestlé Ghana emerged as one of the evening’s notable winners, securing accolades in several key categories. This recognition underscores Nestlé Ghana’s relentless pursuit of excellence and innovation, marking a significant milestone that highlights the company’s substantial contributions to the manufacturing industry in Ghana. Nestlé Ghana's exceptional performance was acknowledged with the following awards: Overall Best National Quality Award, Diamond Category (Food) Overall Best Practices in Sustainable Manufacturing Best Company (Food Sector) Overall Industrial Company of the Year, affirming its status as a leader not only within the food sector but also across Ghana's entire industrial landscape. This success is a ...

Anglogold Ashanti Obuasi Mine tops 2024 Sustainability & Social Investment Awards

 AngloGold Ashanti Obuasi Mine has confirmed its status as sustainability champions by sweeping nine awards, the most won by a company at the 2024 Sustainability & Social Investment Awards (SSI) held at Movenpick Ambassador Hotel in Accra. The feat comes on the heels of a dominant performance in last year's event where AngloGold Ashanti Obuasi Mine swept seven awards. The SSI Awards organised by Ianmatsun Global Services recognizes the most outstanding sustainability, Corporate Social Responsibility (CSR), Environmental, social, and governance (ESG) initiatives in the country and beyond as well as the best teams and individuals who brought them to life. This year's event, which was the 8th edition, was under the theme "Climate Action Now: Accelerating Decarbonization and Building Resilience". The awards won by AngloGold Ashanti on the night include SSI Company of the Year, Best Company in Women Empowerment (project), SSI Company of the Year ( Environment), Best Co...

Zoomlion Advocates Community & Gender inclusive waste management for Climate Action at COP 29

 Africa's waste management giant, Zoomlion Ghana Limited has advocated for an integrated approach to waste management that considers the interest of community members, women and vulnerable groups. James Deku, a Communications Officer of Zoomlion Ghana Limited made this call at the 29th session of the Conference Of Parties (COP 29) of the United Nations Framework Convention for Climate Change (UNFCCC) at Azerbaijan, Baku whiles speaking on the topic "Community-Driven and Gender Inclusive approaches to waste management for Climate Action ". He said the waste sector is a major contributor of methane emissions which is a potent greenhouse gas causing climate change hence the need to manage waste in a manner that considers the interest of all stakeholders. Zoomlion's waste management model is designed and operated in a manner that considers the interest of all stakeholders. Through a Public Private Partnership (PPP) model, local authorities engage community members in clea...