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Vice President Dr. Mahamudu Bawumia has made suggestions on efforts to stabilize the value of the Cedi in relation to gold in an effort to protect the local currency from depreciation and deal with ongoing foreign exchange issues.
This comes after the Bank of Ghana successfully completed a domestic gold purchase program, during which it purchased 65.4 tons of gold worth US$5 billion, greatly increasing Ghana’s gold holdings.
Speaking on Thursday at the Royal Ghana Gold Refinery’s opening in Accra, Dr. Bawumia said the new foreign exchange strategy will guarantee the Cedi’s long-term stability.
“I would like to propose a new foreign exchange regime management architecture for Ghana next year in which the value of the cedi with everything we have put in will be anchored to gold. I want us to move our foreign exchange management because we need an anchor and I believe that the best anchor for the Cedi is gold. I want us to anchor the Cedi to gold.
“I am proposing a framework which we will discuss with the central bank, of course, and we will see where. But the framework that I am proposing is very simple. Having looked at all that we have done, all significant demand for gold should be channelled through the Bank of Ghana’s gold purchase programme.
“If you have GHȼ3 billion and you are looking to buy forex, the Bank of Ghana can take the GHȼ3 billion and buy gold and give you your forex. Demand equals supply, exchange rate doesn’t move.
“It is just a simple use of our gold reserves to meet the demands of forex. Once you can anchor the Cedi with gold so that you are able to meet demand then there are so many extra forex reserves to do other things for the country.
The Vice President said, “But then you will maintain long-term exchange rate stability, which will be anchored on gold, and then we will move forward.”
The Bank of Ghana’s assessment of economic and financial data indicates that, as of July 2024, the Cedi has lost 19.6% of its value in relation to the US dollar.
Source: Ghanatodayonline.com
