- October 18, 2022
- Posted by: Amos Ekow Coffie
- Categories: Banking and Finance, Economics
The Director of Research at the Institute of Economic Affairs (IEA) Dr John Kwakye has called for urgent interventions by the Bank of Ghana (BoG) and the Ministry of Finance to stop the woes of the Cedi.
The Cedi has been reported by Bloomberg to be the world’s worst-performing currency this year as investors continued to squeeze foreign capital to the west African country before a deal with the International Monetary Fund.
The currency of the world’s second-biggest cocoa producer depreciated as much as 3.3% Monday, before paring the loss to 11.2750 per dollar at 3:30 p.m. in the capital Accra. That took its losses this year to more than 45%, the most among 148 currencies tracked by Bloomberg.
Commenting on this, Dr Kwakye tweeted “Urgent interventions are needed to stop the haemorrhaging of the cedi.”
The BoG recently identified five key reasons for the woes of the local currency.
They were “The strength of the US dollar, Investor reaction to Credit Rating Downgrade, Non-Roll over of Maturing Bonds, The sharp rise in crude oil prices and impact on the Oil Bill, Loss of External Financing.”
The central bank went ahead to announce measures introduced to resolve the situation.
They were are the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products; Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.
“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments. The recently approved USD750,000,000 Afrexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.”
The recently signed 1.13billion dollar Cocoa Syndicated loan was also a measure to shore up the Cedi, the BoG added.