We have enough reserves to keep cedi stable in 2021 – BoG

Governor of the Bank of Ghana, Dr. Ernest Addison, has said measures have been put in place to ensure the stability of the cedi in 2021.

The cedis ended in 2020 with a depreciation of 3.8 percent against the dollar.

As of the beginning of 2020, the Ghana cedi was trading at GH¢5.54 to a dollar but it closed the year trading at GH¢5.76 to the US currency.

Speaking on the prospects of the cedi this year, Dr. Addison said the central bank remains resolute in keeping the currency stable throughout the year.

“We were looking at building reserves to the tune of $300 million. The question is whether the $300 million is sufficient to enable us to guarantee a stable exchange rate in 2021. Obviously, it will help, but it will not be the only solution. As you know, the government has indicated its intention of going back to the capital market in 2021, so all of that will help us to keep the cedi stable,” he said.

Dr. Addison mentioned that although most first quarters witness an increase in demand for foreign exchange, he is confident the reserves of the central bank will address the seasonal demand.

“Our currency goes through a seasonal pattern in the first quarter of every year. We see quite a peak demand in the first quarter of every year. We are hoping that the reserves that we have built can help us mitigate that seasonal demand.”

Analysts have attributed the cedi stability to the government's ability to secure a US$3 billion dollar Eurobond facility last year before the full impact of the COVID-19 pandemic.

The coming in of the US$1 billion dollar IMF RCF facility was cited as a factor that ensured the availability of foreign exchange on the market and the eventual stability of the local currency in 2020.