Business News of 2014-02-06

New forex measures could create instability - analyst

A currency analyst, Kelvin Adarkwa, says the new measures announced by the Bank of Ghana to arrest the depreciation of the country's currency has the potential to, in the interim, create price instability in the country.

Describing the measures as "very tight" and "quite harsh" to the end users, Adarkwa said if the measures are "implemented well", it will arrest the plummeting currency.

Ghana's cedi has seen a notable fall against all the major foreign currencies, a situation, which has triggered mass criticisms from business men, traders, students and pastors.

The Bank of Ghana on Wednesday announced a number of measures to arrest the situation.

In a statement, the bank directed that all transactions in the country should be conducted in Ghana cedis in compliance with Bank of Ghana Notice dated October 10, 2012.

The Bank has also revised rules governing the operations of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) with effect from February 5, 2014.

It therefore directed authorized dealers not to sell foreign exchange for the credit of FEA or FCA of their customers.

The statement also said that cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000.00 or its equivalent in convertible foreign currency, per person, per travel.

"No bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer, who is not a foreign exchange earner", the statement further noted.

Speaking to Joy News' Dzifa Bampoh, the currency analyst, Kelvin Adarkwa said the measures may have direct impact on businesses and individuals.

According to him, businesses may be forced to "change prices frequently", something they ordinarily would not want to do.

"That is why they quote their prices in dollars," he stated, adding that the measures are meant to "stop the dollarization of the economy."

With the country's import cover less than three months, Kelvin Adarkwa said the Bank of Ghana does not have the luxury of pumping more dollars to salvage the situation, as some critics have advised government to do.