Scale-up your forex buffers to withstand any shocks on cedi – BoG advised

Economic Analyst with Databank Research, Kweku Arkoh-Koomson, is urging the Bank of Ghana to scale up its forex buffers to withstand any shocks while maintaining the relative stability of the cedi.

According to him, building a sustainable reserve will enable the Central Bank step in, in the event of seasonal shocks that may affect the performance of the local currency.

His comment follows a projection by IC Research that the cedi may lose about 8.4% in value to the US dollar in the retail market this year.

Mr Arkoh-Koomson urged the Bank of Ghana to collaborate with the Development Bank Ghana to invest more in value-addition advancement to improve the country’s export earnings.

“It is very crucial indeed to have a very good FX buffer because it makes you more resistant to external shocks and shocks obligating from financing external debts as well. It is quite crucial to build this sustainable reserve”.

Meanwhile, the Ghana cedi traded unchanged against the US dollar last week at a mid-rate of GH¢12.18/$ on the retail market. The same story emerged on the interbank market.

However, it shed 0.49% and 0.56% week-on-week against the pound and euro respectively.

The foreign exchange market also experienced a decrease in liquidity levels last week as the Bank of Ghana’s supply-side intervention took a pause. But corporate demand remained elevated after the yuletide.

While awaiting the meeting outcome, a positive conclusion will pave the way for Ghana to receive its expected inflows of $1.15 billion from the International Monetary Fund and World Bank. This will potentially ease the pressure on the cedi.