The Bank of Ghana has revealed plans to purchase foreign exchange, particularly dollars, from mining firms and international oil and gas companies to strengthen the country’s forex position.
The follows an emergency Monetary Policy Committee (MPC) on Wednesday, August 17 during which the Central Bank also announced an increment in the primary reserve requirements of banks in the country.
Per the statement issued by the MPC following its emergency meeting, primary reserve requirement of banks has been increased from 12% to 15%
According to the apex bank, this planned purchase is intended to boost the supply of foreign exchange to the economy and effectively strengthen its foreign exchange auctions, particularly to Bulk Oil Distribution Companies (BDCs).
This move by the Central Bank is expected to stabilise the fast depreciating cedi, which has recorded a year-to-date depreciation rate of 25%.
“To boost the supply of foreign exchange to the economy, the Bank of Ghana is working collaboratively with the mining firms, international oil companies, and their bankers to purchase all foreign exchange arising from the voluntary repatriation of export proceeds from mining, and oil and gas companies. This will strengthen the central bank’s foreign exchange auctions,” said the BoG.
Increment in the primary reserve requirement and the purchase of foreign exchange from mining firms and oil and gas companies, the BoG noted, forms additional measures to the increment in its monetary policy rate.
Meanwhile, the Central Bank has raised its monetary policy rate by 300 basis points.
The policy rate on the back of the increment currently stands at 22% from the previous rate of 19%.