BoG to shore up additional reserves to avert further cedi depreciation

The central bank has disclosed its intention to shore up its additional reserves of up to GH¢300 million in a bid to stabilize Ghana's currency.

According to the Governor of the Bank of Ghana, Dr Ernest Addison, the move will be a medium-term solution geared towards averting the persistent fall of the cedi against other major trading currencies.

Speaking at the 95th meeting of the Monetary Policy Committee of the central bank, Dr Addison said; “For the half year period had zero balance and we are hoping that we will be able to build some additional foreign exchange by the end of this year. The target is to build additional reserves of about GH¢300 million.”

Explaining the rationale for shoring up additional reserves, the Governor said; “The essence of trying to build reserves should improve our ability to have a reasonably stable currency. Obviously, the outcome also depends on the principal, export earnings that we have as a country. Considering what happened to oil export receipts, if we do not see an improvement in revenues from oil that will become more challenging so those are the considerations.”

Prior to the central bank’s announcement, government through the Ministry of Finance earlier in January this year established a committee to probe the structural causes of the cedi depreciation and propose adequate measures.

The bi-partisan committee which is known as the Forex Development (FX) Committee will review the current Forex (FX) regime, offer workable alternatives by way of policy interventions which potentially would reduce FX risks in the economy and also identify the inherent constraints in the system.

In 2019, the Ghana cedi depreciated by more than 12.7 percent, the worst performance since 2015 when the cedi depreciated by more than 14.6 percent.

Meanwhile, the Ghana cedi at the present is trading at GH¢5.68 pesewas to the US Dollar and to the Euro at GH¢6.68pesewas. For the British Pound, the cedi currently is trading at GH¢7.32 pesewas.