You will regret your actions soon; BoG Governor to currency speculators
The Governor of the Bank of Ghana (BoG) Dr. Ernest Addison has cautioned people speculating and betting on the cedi’s current challenges to desist from the act, warning such persons will soon regret their actions.
“The Bank has enough foreign exchange reserves to support the market and economic agents should stop engaging in speculative purchases as they will suffer economic losses when the correction occurs”, he stressed.
Dr. Addison’s caution is coming at a time activities of speculators are reported to have also contributed to the current pressures on the cedi.
He assured that “the Bank of Ghana remains fully committed to providing stability in the exchange rate”.
“The Bank of Ghana has built over 2 billion dollars since the country started the IMF programme in 2023 and that has put us in a strong position to support the local currency”, he added.
Dr. Addison expressed optimism that the buffers created by the Bank of Ghana will soon correct the market sentiments.
“We think that should give some assurance to those who are unnecessarily speculating on the Ghana cedi to desist from it. There will be correction and when that correction takes place, we know the implications of that”, he said.
Dr. Addison announced that the country’s reserves are gradually building up, reaching sustaining levels to support the country’s Balance of Payment.
“The country’s International Reserves as at the end of April this year stood at $6.5 billion, representing 3 months of import cover”.
IMF Programme and cedi’s stability
The International Monetary Fund (IMF) programme requires the Bank of Ghana to build up some substantial amount of dollar reserves to help deal with some challenges in the future.
This is before Ghana signed up to the IMF programme on May 17, 2023.
Even though some observers have stated that the Bank of Ghana is restricted from intervening on the market, Dr. Addison insisted that the IMF programme does not hamper the regulator from carrying out the necessary market intervention when needed.
“We have some indicative targets in terms of the amount of intervention that the Bank of Ghana can do, but they are not deal breakers”, he explained.
The Governor stated that the exchange rate pressures witnessed in recent weeks reflect a weakening of the current account surplus.
“It is due to higher import demand and lower export revenue, especially a sharp fall in cocoa export earnings”, he clarified.
Other measures to help stabilize cedi
The Bank of Ghana has also rolled out some additional measures to help stabilize the cedi.
This include: working with the Ghana Association of Banks to streamline documentation requirements for foreign payments.
This is to deal with the “high demand pressures on the foreign exchange market”.
In addition, Dr. Addison announced that it will directly absolve foreign exchange needs of some corporate institutions, to a reduce pipeline demand for foreign exchange from the commercial banks.
The Governor stated that the Bank is fully aware of the operations of illegal operators in the foreign exchange market and is working with the Financial Intelligence Centre to sanitise the foreign exchange market.