There’ll be market correction soon – BoG Governor warns currency speculators

Source The Ghana Report

The Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has warned currency speculators to desist from unnecessary currency speculations else they will live to regret it.

According to Dr Addison, the currency market will soon correct itself and the implications of the corrections on speculators would be dire.

“We have accumulated over $2 billion in foreign exchange reserves, surpassing even the three-year target ahead of schedule. This significant reserve build-up should be noted, alongside the fact that we have the capacity to manage the foreign exchange market effectively.

“Given our progress, I urge those engaging in unnecessary currency speculation to reconsider, as there will be [market] correction and the implications of such corrections on speculators are well understood,” he stressed.

However, some financial analysts believe that blaming speculators for currency woes is an oversimplification that distracts from addressing deeper economic issues.

They contend that currency speculation is not only a legitimate investment activity but also a vital component of a healthy financial market.

Currency speculation is the practice of making bets on the future value of a currency.

Speculators seek to profit from changes in exchange rates by buying or selling a currency in anticipation of its future value.

Dr. Addison indicated that all things being equal the expected $2.3 billion inflows will significantly strengthen the country’s reserve position and help contain the forex market pressures.

These inflows include $360 million from the International Monetary Fund (IMF), $300 million from the World Bank and the $850 million Cocoa Syndicated Loan.

The Ghana cedi has come under severe pressure since January 2024 despite the IMF-support programme.

It has so far lost more than 21% in value to the US dollar, ranking it among the four worst currencies in Africa in 2024. The other currencies are the Nigerian naira, Egyptian pound and the Lebanese pound.

It is presently selling at GH¢15.75 to the US dollar at the forex bureaus.

More on currency speculation

This practice is not merely a gamble but rather a sophisticated investment strategy that requires substantial knowledge of global economic trends, geopolitical developments, and market dynamics.

Speculators invest significant resources in research and analysis to predict currency movements accurately.

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