16th July 2024

Dr Ernest Addison, BoG Governor

The Governor of the Bank of Ghana (BoG), Ernest Addison, has given a firm assurance that steps are being undertaken to ensure that the interbank market takes full control of the forex market.

The measure forms part of efforts to enforce regulations surrounding forex trading to streamline the supply of forex in the country.

During a crunch meeting with the leadership of universal banks and the Association of Forex Bureau Operators in Accra yesterday, Dr. Addison said his outfit was poised to work with relevant stakeholders to stabilise the foreign exchange market, and help contain the fall in the value of the cedi.

He, therefore, urged the association to be policy-compliant, and desist from manipulating forex rates in confronting speculative buying related to the industry and the creation of unnecessary panic in the market.

It is in this direction that the leadership of universal banks, together with other stakeholders and the central bank, agreed to work in close collaboration to stem the rapid depreciation of the cedi.

Global shock

Dr. Addison acknowledged that the financial market is not functioning properly on account of the global economic meltdown occasioned by the geo-political tension between Russia and Ukraine, which has caused supply-demand imbalances in several commodity markets, high inflation, high cost of living, and high uncertainties in financial markets.

He also referred to data that indicate that Ghana started the year with six cedis to the dollar but got to seven till it moved to “7.6 in July, 8 in August, 9.6 in September, and now it is 12. 5. But we are here again with people sending messages that the dollar cedi rate is 15 cedis to a dollar.”

“Clearly, this type of movement does not deflect changes in the fundamentals…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.

Increasing speculations

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 Monitory Fund (IMF) for a $3 billion loan facility are increasing speculations over Ghana’s debt sustainability status.

They called on the BoG to employ adequate mechanisms to regularise forex brokers in a way that will ensure their efficient supervision, and prevent the sale of foreign currencies at exorbitant prices.

Members of the Association of Forex Bureau Operators commended the central bank for its role in clamping down on illegal forex dealers in a move to sanitise the sector, and ensure licensed forex operators deal in exchange transactions.

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, have begun cutting their losses, and moving their investments into safe havens, a move that is contributing to the rapid depreciation of the local currency.

Present at the meeting were the managing directors (MDs) of Ghana Commercial Bank (GCB), Fidelity Bank, Ecobank, Societe General, Absa, Stanbic, First National, Bank of Africa, among others, as well as heads of the Association of Forex Bureau Operators.

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