Home Headlines Bank of Ghana Establishes Task Force to Stabilize Cedi

Bank of Ghana Establishes Task Force to Stabilize Cedi

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U.S Dollars and Ghana Cedi
U.S Dollars and Ghana Cedi

The Bank of Ghana (BoG) has created a task force to monitor and regulate foreign exchange bureaus to curb the depreciation of the Cedi.

Dr. Ernest Addison, the Governor of the BoG, announced this initiative on May 27, 2024, emphasizing the bank’s commitment to maintaining exchange rate stability.

Key Measures and Actions

  1. Task Force Formation:
    • The task force will ensure regulatory compliance and monitor the operations of all foreign exchange bureaus. This move aims to address illegal activities in the foreign exchange market in collaboration with the Financial Intelligence Centre.
  2. Ceasing Rate Advertisements:
    • Foreign exchange bureaus have been ordered to stop advertising rates outside their premises and on social media platforms to mitigate informal market influences.
  3. Streamlining Documentation:
    • The BoG has worked with the Ghana Association of Banks to streamline documentation requirements for foreign payments, aiming to reduce the reliance on informal markets.
  4. Improved Reserves:
    • The BoG has bolstered its reserves by adding over US$600 million in the first five months of 2024, resulting in a strong liquid monetary holding of over 26.6 pounds, estimated at 2.1 billion US dollars, supported by a successful domestic gold purchase program.
  5. Direct Absorption of Forex Needs:
    • The BoG has taken measures to directly meet the foreign exchange needs of some corporate institutions, reducing the demand for forex from commercial banks.

Current Economic Context

  • Cedi Depreciation:
    • As of May 22, 2024, the Cedi has depreciated by 14.6% against the US dollar on a year-to-date basis, a significant improvement compared to the 21.8% depreciation in the first five months of 2023.

Addressing Market Sentiments

  • Election Year Impact:
    • Dr. Addison highlighted the importance of managing public statements that could affect market confidence, especially during the election year, as the foreign exchange market is sensitive to economic sentiments and pronouncements.

Conclusion

The BoG’s comprehensive measures, including the establishment of a dedicated task force and improved foreign exchange reserves, demonstrate a proactive approach to stabilizing the Cedi and ensuring regulatory compliance within the foreign exchange market. This initiative is expected to enhance market conduct, reduce informal market activities, and bolster the overall confidence in Ghana’s financial stability.

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