BoG intervention alone in forex market cannot ensure lasting cedi stability

The Institute for Economic Affairs (IEA) is warning that the Bank of Ghana’s intervention alone in the forex market cannot ensure lasting exchange rate stability without far-reaching reform measures.

After peaking at GH¢16.30 in October, the cedi declined to GH¢15.37 in November and further to GH¢14.70 in December.

The GHS/GBP and GHS/EUR rates followed similar patterns.

IEA said the rate decline was presumably due to stepped-up intervention by the Bank of Ghana before the 2024 election.

“In fact, by October, before the intervention, the GHS/USD had risen to GH¢16.30”, it mentioned.

The question is whether the appreciation in the rate in November and December could be sustained. The fact is that, as indicated below, Bank of Ghana’s intervention alone cannot ensure a lasting exchange rate stability without far-reaching reform measures”, it added.

The year-to-date depreciation of the cedi against the dollar peaked at -27.1 in October 2024 before declining to -22.7% in November 2024 and further to -19.18% in December 2024.

The deprecation in 2024 followed a further depreciation of 27.8% in 2023.

Continuing, the economic think tank said the cedi has a history of chronic depreciation. This is the result of the persistent gap between foreign exchange (FX) demand and supply.

Closing the gap, it alluded, requires policies to limit FX demand and increase FX supply.

“On the FX demand side, it is necessary to actively promote domestic production of import substitutes to reduce demand for FX for imports; entrench fiscal and monetary discipline to reduce demand pressures in the economy, including demand for FX; and enforce domestic FX market regulations to reduce demand for FX”, it pointed out.

On the FX supply side, there is a need for active promotion of exports to increase supply of FX; promotion of remittances to increase supply of FX; and greater Ghanaian ownership of resources and economic assets to increase supply of FX in the economy”, it added.

It concluded that these proposals are not really new, except that “we do not seem to pay them the needed attention. This is the reason for reiterating them here”.

Comments

US-Based Doctor Supports Weija Leprosarium, Underprivileged Children In Ankaase With Cash & Food Items

In a remarkable display of philanthropy, US-based medical practitioner, Dr. Kofi Kyei Sarfo, and the Sarfo family have made significant donations to support vulnerable communities in Ghana. During his visit to Ghana for the Christmas and New Year festivities, Dr. Sarfo and his family donated assorted food items and $5,000 to the Weija Leprosarium in Accra. This generous act aims to improve the lives of the inmates and support the tireless efforts of Rev. Father Andrew Campbell, founder of the Lepers Aid Committee. The donation to the Weija Leprosarium is a testament to Dr. Sarfo's commitment to giving back to his community. He praised Rev. Father Andrew Campbell for his selfless work in integrating cured lepers into society, emphasizing the need for continued support to ensure the well-being of the inmates. Dr. Sarfo encouraged others to follow in his footsteps, stating that every donation, no matter how small, can make a significant difference in the lives of the inmates. The don...

Kenpong Travel & Tours Champions Breast Cancer Awareness During Customer Week

As part of activities to mark Customer Week, Kenpong Travel & Tours, a leading travel agency in Ghana, is joining the global fight against breast cancer. October is Breast Cancer Awareness Month, and the company is passionate about spreading hope and support to those affected. At Kenpong Travel & Tours, we believe that travel and exploration can be therapeutic and empowering. That's why we're committed to supporting our customers and the broader community in the fight against breast cancer. We're proud to stand in solidarity with breast cancer warriors and survivors. At Kenpong Travel & Tours, we believe that everyone deserves a chance to explore the world and create unforgettable memories. Let's prioritize health, support one another, and fight against breast cancer," said Kennedy Agyapong, CEO of Kenpong Travel & Tours. Our efforts are focused on raising awareness, promoting early detection, and supporting those affected by breast cancer. We urg...

Mfantsiman Girls to Host 65th Speech & Prize-Giving Day

Mfantsiman Girls Senior High School is set to host the 65th Speech and Prize-giving Day and Homecoming from 14th to 16th March at Saltpond in the Central region. This year’s Speech and Prize-giving day is being hosted by the 2000-year group, and over 5000 old girls and students of Mfantsiman Girls are expected to attend the programme. Under the theme, ‘Leveraging New Media Technology to Optimize Girl Child Education,’ the event will emphasize the importance of harnessing technology to address the unique challenges faced by girls in accessing quality education, particularly in marginalized communities. By leveraging new media technology, we can create inclusive, interactive, and engaging learning environments that empower girls to reach their full potential. The theme will also serve as a call to action, encouraging students, educators, and stakeholders to explore innovative ways to integrate technology into girl child education, ultimately driving positive change and promoting a...

Kofi Ahovi

Search This Blog