Traders back BoG over new forex directives

The Importers and Exporters Association of Ghana has patted the Bank of Ghana on the back for the new forex directives it has introduced in a bid to reduce its involvement in the forex market.

In an interview with the B&FT, the Executive Secretary of the association, Samson A. Asaki, said the new directives are a reprieve to business people involved in international trade, as it will now make it possible for them to convert their monies into forex at their own convenience and with the banks of their choice.

“I think it is a call in the right direction as compared to what happened during his [Dr Issahaku’s] predecessor’s time when he directed that all repatriated proceeds be converted into Ghana cedis within three days and be deposited at the Bank of Ghana,” he said.

“The problem that came with that directive was that, after depositing the funds with the central bank, it became difficult for the bank to release the money to you at the time you needed it most. So just imagine if you have your goods at the port and you need that money to clear it, by the time the money comes in then you will be preparing to pay demurrage,” Mr. Asaki said.

“But with this new directive, our proceeds will now go to the commercial banks which will make forex available to us at any time we need it. It will also help stabilize the local currency because there will be more forex in the country. Businessmen will now also feel comfortable to convert their currency at any time they want. So we pray they are able to implement it as promised,” he added.

The Bank of Ghana (BoG) earlier this month issued a new foreign currency directive that require exporters to repatriate all export proceeds to the country, which alters several forex requirements of the central bank.

The guidelines seek to reduce BoG’s involvement in the daily forex market and give more freedom for commercial banks to work with other players in the market

Other key players in the financial market have also shown their approval of the new forex directives, which are to take effect beginning July 1, 2016.

In an interview with the B&FT, Alhassan Andani, Managing Director of Stanbic Bank called the directive the “best policy ever”.

He said: “It is the best policy ever, because the market is the best manager of resource, it’s been proved over the years and over several economic experimentations around the world that regulators don’t manage situations.

It will significantly reduce speculation, because the market will have enough information and FX. Once the supply and demand situations are determined by the markets, speculators will have no room. Exporters and importers will now know that they can exchange on an open and transparent market, and we will get some price stability.”

Also, a report by RMB Global Markets Research has said the new Bank of Ghana forex guidelines could increase the daily interbank trade volumes from about US$25million to about US$65million, which will significantly sustain stability over long periods.