The Bank of Ghana (BoG), on Tuesday, 25th October 2022, met with stakeholders within the foreign exchange market, including the Managing Directors of the universal banks in the country and the Association of Forex Bureau Operators to deliberate on measures to streamline, sanitise and provide clarity on the supply of forex in the country.
In his opening remarks, the Governor of the BoG, Dr Ernest Addison, acknowledged that though the global economic meltdown occasioned by the geo-political tension between Russia and Ukraine had caused supply-demand imbalances in several commodity markets, high inflation, high-cost of living and high uncertainties in financial markets, the BoG was poised to work with relevant stakeholders to stabilise the foreign exchange market and help contain the fall in value of the cedi.
“Available data indicate that we started the year GH¢6 to the dollar. It got to GH¢7 and we stayed at GH¢7 in June, GH¢7.6 in July, GH¢8 in August, GH¢9.6 in September and now it is GH¢12.5. But we are here again with people sending messages that the dollar-cedi rate is GH¢15 to a dollar.
“Clearly, this type of movement does not reflect changes in the fundamentals. It is clear that the market is not functioning properly. We are seeing speculations taking over under very disorderly market conditions and it appears now the black market is rather driving exchange rates. This we cannot allow to continue,” he said.
On the measures to reduce inflation, the Governor indicated that his outfit will continue to tighten monetary policy to prevent inflation from being entrenched. He indicated that the monetary policies should be complemented with fiscal policies.
The Governor further said that “as we are all aware, we got the $750 million from the AfriExim Bank and I think today [October 26, 2022], we are supposed to receive the $790 million from the COCOBOD syndicated loan so the Central Bank has some liquidity”.
He also stressed that the Central Bank has enough liquidity to keep things relatively stable till the International Monetary Fund Programme kicks in and the financing assurances expected from other partners come in.
“I am aware of the recent developments in terms of liquidity in the banking sector. As I said, I took note of the advice from Washington on the financial stability issue that there has to be targeted liquidity support to preserve financial stability without undermining the inflation control objectives. So this is really the context we should have the discussion on all the complaints of we need liquidity and BoG not supplying liquidity.
“Yesterday I met the CEOs and I have assured them that we will provide the necessary liquidity to ensure that we don’t have a system of a liquidity problem. But we do that within the context of keeping inflation low”.
The leadership of the banks blamed the rapid depreciation of the cedi on a wide array of issues.
Most prominently, they attributed it to the uncertainties surrounding the future of Ghanaian bonds.
They said the ongoing discussions between the government and the International Monetary Fund (IMF) for a $3 billion loan facility was increasing speculations over Ghana’s debt sustainability status.
Though the Bretton Woods institution has maintained that any talk of debt restructuring is dependent on an ongoing Debt Sustainability Analysis (DSA), investors, according to the banks, had begun cutting their losses and moving their investments into safe havens, a move that was contributing to the rapid depreciation of the local currency.
They called on the BoG to employ adequate mechanisms to regularise forex brokers in a way that would ensure their efficient supervision and prevent the sale of foreign currencies at exorbitant prices.
This, Dr Addison assured the leadership that, the BoG was taking steps to restore order in the forex market by making sure the interbank market took full control of the forex market to enforce regulations surrounding forex trading so as to streamline the supply of forex in the country.
On Black market issues, the Members of the Association of Forex Bureau Operators commended the Central Bank for its role in clamping down on illegal forex dealers also known as “Black Market” in a move to sanitise the sector and ensure licensed forex operators to deal in exchange transactions.
The Governor charged the association to be law compliant and cautioned them to desist from determining forex rates which had contributed to the speculation of rates, thus creating unnecessary panic in the market, contributing to the rapid depreciation of the local currency.
Present at the meeting were Managing Directors of the Universal Banks in the country, led by the President of the Ghana Association of Banks and CEO of the Stanchart Ghana , Ms. Mansah Nettey.
The Association of Forex Bureau Operators was led by the President of the Forex Bureau Association of Ghana, K. T. Dadzie.
