Business News of 2014-08-13

Stop hoarding US dollars – Royal Bank CEO

Businesses and individuals holding on to foreign currencies, particularly the United States dollar, must desist from the practice to ensure availability of the currency on the market to facilitate business transactions.
The Founder of The Royal Bank (TRB), Alhaji Adamu Iddrisu, who made the call, said hoarding the dollar created unnecessary shortage which prevented those in real need of the currency to engage in foreign transactions from doing so.
Besides the fact that the situation contributed to supply deficit, it also further weakened the cedi against the dollar as real demand exceeded supply.
Speaking at the launch of The Royal Bank Foundation in Accra on August 7, he said the practice contributed to the fall of the cedi, explaining that “because of the shortages those who need the US?dollar are forced to use more cedis to purchase that currency and that brings the problem.”
Since January to date, the cedi has depreciated by almost 30 per cent against the US dollar, which is the major foreign exchange currency used in international trade and finance.
As of last week, the US dollar was exchanging for GH¢3.5 at the interbank level, according to the Ghana Association of Bankers, while it hovered around an average of GH¢3.055 on the parallel market.
This has thrown the budget of many businesses out of balance.
The depreciation of the cedi has been a major contributor to the rising inflation in the country since most consumable goods, including raw materials for production, were imported.
Ghana’s trade balance has not been impressive because the economy is more import led and not export driven.
The central bank, in February this year, introduced some measures to reduce the reliance on the US dollar for trading in the country, but very little or nothing seems to have been achieved as the local currency continues to suffer persistent slide.
Many are those who price their good and services in the US dollar, while others, instead of investing their excess liquidity on the capital market, tend to buy more US dollars to hoard in anticipation of the continuous fall in value of the cedi.
Alhaji Adamu said it served nobody any good to hoard the US dollar because of the consequences, and advised those behind to desist from it in the best interest of the country.
TRB Foundation
The foundation’s initial task is to provide 50 boreholes in 50 deprived communities (in the country) in need of clean water.
The move is to address the water shortage problems in rural communities.
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