BoG’s measures against dollars making impact – Stephen Opata

The Director of Financial Markets at the Central Bank of Ghana, Stephen Opata, has attributed the cedis’ current appreciation to the new set of monetary measures initiated.

Stephen Opata disclosed that, the recent rise in the value of the cedi’s performance can be linked to BoG’s decision to restrict foreign exchange support to some essential commodities like petroleum products, as well as medical and pharmaceutical products.

In making a case for his submission, Mr. Opata mentioned the cedi has witnessed some sustained gains against the US dollar on the forex market after BoG’s decision to withdraw itself from financial support granted for the import of commodities like rice, wheat, petroleum and some medicinal products.

The local currency has moved from ₵15 since November 2022 to around ₵8 per dollar based on the average quotes published by BoG and some commercial banks in the country.

According to him, another major reason that has contributed to the cedi’s stability against the dollar over the past few weeks can also be attributed to BOG’s prudent management of liquidity in the financial system.

“We have also seen that Monetary Policy has been tightened, coming on the back of recent increases in the policy rate to 27 percent. This has also contributed to the cedi’s good run.

“The continuous hike in the policy rate will also ensure that excess cedis cannot be used to purchase government bonds and other securities, despite current concerns with the proposed debt exchange programme” Stephen Opata said.

Factors

According to Mr. Stephen Opata, some financial analysts have also attributed the quick turnaround of the Ghana cedi to government’s staff agreement deal with the IMF.

Some analysts have pointed out that, signals by the US Federal Reserve to start slowing down the rate hikes has also contributed to the cedi’s stability, he said.

According to Bloomberg, the cedi gained more than 10 percent against the dollar from December 5, 2022 to December 9, 2022. This, made the cedi gained the biggest advancement, among 150 currencies in the World Tracked by Bloomberg News.

Bloomberg in its tracker showed the Ghana cedi rose about 10 percent, compared to other top four currencies around the world on December 12 2022.

Databank Financial Service in its weekly report earlier predicted that, the good run of the cedi will be sustained in the coming weeks.

Hence, Mr. Opata in making reference to the reports by various analyst disclosed that, the sudden appreciation of the cedi is not of much surprise, as BoG is doing its best in recovering the economy.

Mr. Opata emphasized on the fact that, sustaining the performance of the cedi will not only depend on supply of the currency.

“The issue will also depend on the current on-going reforms in the economy that is being undertaken by government. The staff deal with the IMF is major development that will help stabilize the cedis” he added.