In recent weeks, the dollar has started to steadily increase against the cedi, raising fears that the nation is on the verge of returning to the gloomy 2022 period when the cedi fell.
The Bank of Ghana is now quoting the currency rate as 10.30 Ghana cedis to one US dollar, however some businesses are claiming 12.50.
Nevertheless, despite the increase, Dr. Ernest Addision, the governor of the central bank, is optimistic that the cedi’s worst days are behind it.
He claims that the weak performance of the currency in 2022 won’t happen again.
If the debt swap scheme is effective, he claimed, then this is also feasible.
“Government has announced a debt stand still and that debt standstill means that the outflows – the money used to service foreign debt will not go out anymore.
“That gives us a lot of room and takes pressure on the foreign exchange market. So because of that debt standstill, I can say that we should expect the currency to remain relatively stable.
If all goes according to plan, “I can put my neck out that we will not see the sort of things we saw in 2022,” he added.
Dr. Addision, in response to inquiries at the Parliament’s Public Accounts Committee, acknowledged that the nation’s foreign reserves were insufficient, with import coverage only lasting an additional month and a half.
“It depends on what transactions have taken place that week, maybe there have been payments to contractors, typically, those types of payment can move the exchange rate immediately and convert that into the foreign exchange – it could be payment for energy, for the energy sector a lot of payments are outflows they impact on the foreign exchange market so the exchange rate really reflects a lot of the day to day pressures of the economy,” he clarified.
In related news, the bank is optimistic it can keep the Gold for Oil program going.
According to the Central Bank, the nation has enough gold reserves to continue the program.
Stephen Opata, the Bank of Ghana’s Director of Financial Markets, said this on Monday, January 16, during his appearance before the Public Accounts Committee (PAC).
He claims that there is no need for alarm because the Central Bank is prepared to fulfill the agreement’s requirement for 160,000 ounces of gold each month.
“As for the quantities, based on the production numbers we saw last year, gold has picked up. We believe that we can buy enough gold to sustain the program.
“I must say that the numbers we are currently looking at is about 160,000 ounces per month and that will represent about 50 to 60 per cent of the consumption of the country. According to what PMMC indicates, I think we have volumes to support the programme,” Mr Opata said.
On Monday, the first shipment of oil covered by the policy landed at the Tema Port.
Following that, Bulk Oil Storage and Transportation received the 40,000 metric tons of oil from the United Arab Emirates (BOST).
BOST will next develop arrangements for its sale and distribution to the Oil Marketing Companies.
The Governor of the Bank of Ghana stated that the first consignment’s arrival has lessened pressure on the international market.
We won’t be increasing pressure on the currency market if this government-to-government agreement is successful.