Ghana cedi to remain strong - BoG

The Central bank is optimistic that the Ghana Cedi would remain strong as the bank will continue to ensure stability on the forex market.

According to the Governor of the Central Bank, Dr. Henry Kofi Wampah, the cedi assets have continued to be more attractive in terms of yields than forex assets adding “we intend to maintain that going forward”.

He assured that, the Bank will continue with its tight monetary policy stance. Policies implemented in the second quarter of last year will not be relaxed. These should be able to restrict demand for forex.

According to the governor, the Central Bank will increase supply of forex on the market as the bank is currently comfortable with the level of reserves which is now US$ 5.2 billion as of end April.

He explained that the slight decline in the reserves from the end-December 2012 stock of US$ 5.4 billion was in line with seasonal trends. “The country has currently witnessed a decline in the terms of trade. This decline may, however, be compensated for by increased oil production this year, and the onset of gas production towards the end of the year” he added.

Dr. Wampah said the Bank will continue to apply the foreign exchange Act and regulations vigorously cautioning that any institution including Banks that fall foul of the laws will be sanctioned appropriately. “We intend to ensure that the cedi remains the only legal tender in this country. In this regard, we need the co-operation of the Banks (forex dealers), the state institutions and all other relevant institutions to achieve this”.

The recent trends in the exchange rate also reflect seasonality in demand and supply of forex in the foreign exchange market. Seasonally, demand is high around this time of the year due to the settlement of import bills after the festivities (Christmas and Easter) as well as demand from the corporate sector to meet dividend transfers, which is legal and happens every year around this time.

On the other hand, however, supply is also low at this time of the year as most of our forex receipts come during the second half of the year. These pressures have occurred in the past, and they are consistent with past trends.

The bank will assess the macroeconomic situation during its next MPC meeting in May 2013.” Based on the outcome we will determine if there is the need for any additional measures. As at now, we believe the measures are sufficient to deal with the seasonalities” he said.