Bank of Ghana Plans Steps to Stabilize Cedi by End FebruaryPauline Bax and Moses Mozart Dzawu
The Bank of Ghana will announce foreign-exchange policies as soon as the end of February to help stabilize the cedi, Johnson Asiama, head of the economic analysis and monetary policy coordinating committee, said.
The measures, which will not affect the ability to transfer foreign currency, seek to “slow down the movement” of the cedi, he said in Accra today at a conference. The cedi has dropped 2.1 percent this year against the dollar, making it the fourth-worst performing African currency.
Governor Kofi Wampah said in December that the central bank will act to increase transparency in currency trading and reduce volatility of the cedi, which dropped 20 percent last year and is fueling inflation. The bank is ready to act to curb inflation if necessary, he said. The Bank of Ghana has boosted foreign reserves by about $1 billion in the past two years in case it needs to battle sudden outflows from foreign investors.
The bank is also examining the operations of foreign-exchange bureaus and considering discouraging the use of foreign-currency accounts outside of the trading industry, Asiama said.
“We are also looking at forex bureaus. Currently bureaus can buy and sell any amount. In other countries that is not the case,” he said.
The cedi dropped 0.6 percent today to 2.425 per dollar at 3:48 p.m. in Accra. Inflation quickened to 13.5 percent in December from 13.2 percent in November, the Ghana Statistical Service said this month.
“The measures will ease pressure on the cedi,” Yaw Adu-Koranteng, research analyst at NDK Asset Management Ltd. in Accra, said by phone. “Capping the amount of foreign currency that forex exchanges can buy or sell will refer big transactions to be done through the banks, that will help to reduce volatility.”