Governor Dr Ernest Addison of the Bank of Ghana (BoG) has reported that the Ghana Cedi has experienced relative stability in recent weeks, attributed to the central bank’s tight monetary policy measures and regulatory actions.
During the 119th Monetary Policy Committee (MPC) press conference on July 26, Dr Addison addressed the media, emphasizing that the central bank’s stringent measures have played a crucial role in stabilizing the foreign exchange market.
Points on Cedi Stability:
Monetary Policy Impact: The Cedi faced significant pressure earlier in the year, particularly in May 2024, but has shown signs of stabilization. Dr Addison credited this improvement to the central bank’s continued tight monetary policy stance, which includes dynamic adjustments to the Cash Reserve Ratio (CRR) to manage liquidity and revised regulations on import payments.
Regulatory Measures: The BoG, in collaboration with the Financial Intelligence Centre, has taken steps to regulate the foreign exchange market more effectively. This includes monitoring foreign exchange bureaux to ensure compliance with regulatory frameworks and addressing unauthorized advertising practices. The central bank has established a task force to oversee these bureaux and enforce regulations.
Sentiment and Stability: Dr Addison noted that market sentiment, influenced by pronouncements and events in the election year, also impacts Cedi’s stability. The Governor urged stakeholders to manage their communications carefully to maintain confidence in the local economy.
Performance Comparison: From the beginning of the year to July 19, 2024, the Cedi depreciated by 19.6% against the US Dollar, an improvement compared to the 22.1% depreciation observed during the same period last year.
Dr Addison highlighted that the recent stability reflects positive outcomes from the IMF Extended Credit Facility and agreements with external creditors, contributing to improved sentiment in the foreign exchange market.
These efforts by the Bank of Ghana aim to ensure sustained stability and confidence in the Ghanaian currency, supporting broader economic stability amid ongoing challenges.
