A Member of Parliament’s Finance Committee is accusing the Governor of the Bank of Ghana of publishing irregular interbank foreign exchange rates.
The Obuasi West MP Kwaku Kwarteng describes the action, which he claimed deviates drastically from the official rates quoted by Ghanaian banks and rates prevailing in the Ghanaian currency market, as illegal.
“Governor, the interbank foreign exchange rates the Bank of Ghana is currently publishing are not just irregular, they are also illegal. The conduct of the Bank of Ghana constitutes ‘Multiple Currency Practice’,” he said in a two-page letter addressed to the Governor of the Bank of Ghana, Dr. Kofi Wampah.
He also said the Bank’s conduct is “extremely worrying” because as the regulator of Ghana’s banking industry, it is required to instil sanity in the monetary system.
Below is the full letter
5th September 2014
BANK OF GHANA
ONE THORPE ROAD
IMPLICATIONS OF THE IRREGULAR INTERBANK EXCHANGE RATE FIGURES BEING PUT OUT BY THE BANK OF GHANA
I write respectfully to draw the Bank of Ghana’s attention to the implications of the irregular currency and exchange rate practices being perpetrated by the Bank of Ghana.
Since 11th July 2014, the Bank of Ghana has been publishing interbank foreign exchange rates that deviate drastically from the official rates quoted by Ghanaian banks and rates prevailing in the Ghanaian currency market. Consequently, per the Bank of Ghana figures, the Cedi has remained quite stable in the last three months while it has depreciated significantly in Ghana’s foreign exchange market.
On 20th August 2014 for instance, the Bank of Ghana published the selling rate for the United States Dollar as GH¢3.03. But on that day, the country’s major banks including the Ghana Commercial Bank, National Investment Bank, Agricultural Development Bank, Barclays Bank, Ecobank, Standard Chartered Bank, Prudential Bank, Cal Bank, Access Bank, Unibank, Access Bank, Royal Bank, SGS, UBA all quoted rates in the close neighbourhood of GH¢3.80 to the US Dollar.
It is worth noting that international exchange rate information sources such as Bloomberg, XE, Yahoo Finance, Oanda, all published rates in the close neighbourhood of GH¢3.80 to the US Dollar, which reflected official currency prices in our Ghanaian banks and in the Ghanaian currency market.
Governor, the interbank foreign exchange rates the Bank of Ghana is currently publishing are not just irregular, they are also illegal. The conduct of the Bank of Ghana constitutes “Multiple Currency Practice”. It is, and has to be taken as a serious development that could border on fraudulent manipulation of exchange rates, with potentially damaging consequences for our international reputation. Also, this situation could create problems in our economy.
For instance, the National Petroleum Authority (NPA) determines fuel prices on the basis of Bank of Ghana’s exchange rate figures. This means, importers of petroleum products who officially get their foreign currency from our commercial banks at market exchange rates (not Bank of Ghana exchange rates) to pay for their imports incur serious and unfair losses when they, as the law requires, sell their fuel at NPA prices. This hurts our downstream petroleum industry and could create fuel shortages with its attendant impact on livelihoods and general standards of living.
Again, cocoa farmers who are paid cocoa producer prices determined with Bank of Ghana’s exchange rates are cheated because our cocoa farmers buy imported items from the market at prices based on market exchange rates (not on Bank of Ghana exchange rates). There are countless such harmful cases in the economy.
Governor, it has to be remembered that discriminatory or multiple currency practices also offend our Articles of Agreement with international finance institutions, and could attract punitive measures which would damage our international reputation and have consequences for investor confidence in our economy.
As the regulator of Ghana’s banking industry required to instil sanity in our monetary system, this conduct by the Bank is extremely worrying. The Bank is opening the gate for the intervention of Parliament or the law courts. But intervention by such state institutions in such an operational matter will compromise your independence as a central bank. It is for this reason that I write to the Bank, in the hope that you will take immediate steps to correct this irregular currency practice.
Member of Parliament’s Finance Committee
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