Cedi free fall: Major relief as BoG pumps in more dollars

The cedi continues to depreciate against the major international currencies this month.

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Ghana Cedi play

Ghana Cedi

Governor of Bank of Ghana, Dr. Henry Kofi Wampah play

Governor of Bank of Ghana, Dr. Henry Kofi Wampah

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The Bank of Ghana (BoG) is to inject more dollars into the economy in its quest to help halt the fee fall of the cedi.

The move, which is intended among other things to augment directive in a bid to save the troubling local currency.

The BoG took the decision after a meeting with the commercial banks last Friday.

The regulator was also seeking to get some insights from the bankers on factors causing cedi’s fall.

This is part of the short-term measures the Bank of Ghana is adopting to prevent continuous drop in the cedi’s value going forward.  

A report by Joy FM indicates that an initial amount of 20 million dollars was released on Friday after the meeting, with a promise that more will now be advanced to the commercial banks every day going forward.

The country currently requires about 300 million dollars every week to finance imports, so if the Bank of Ghana should be advancing on the average some 20 million dollars a day that will amount to about 100 million dollars a week, still short of what is required every week to support imports.

Since one of the main causes of local currency’s depreciation is a serious short fall in supply of dollar cash on the market, the action by the central bank should bring some relief to businesses.

However, more trouble looms for government as various industries and associations complain about the government's poor handling of the economy.

The fast depreciation of the cedi is gradually hurting local businesses. As a result of the depreciation, goods imported into the country have become expensive on the local market.

The situation has also slowed down businesses, as producers face challenges in procuring raw materials, while customers are unable to buy the goods on the market.

Checks at the interbank level indicated that $1 is being exchanged for GH¢4.25 while at the forex bureaux $1 is being quoted for between Ghc4.30 and Ghc4.31. At the black market level, $1 is going for between GH¢4.35 and GH¢4.38.

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