Concerns are being raised about recent interbank exchange rate quotations put out by the Bank of Ghana (BoG).
‘The interbank foreign exchange rates the Bank of Ghana is currently publishing are not just irregular, they are also illegal,’ the Member of Parliament (MP) for Obuasi West, Kwaku Kwarteng, has challenged.
In a letter to the Governor of the Bank of Ghana, Henry Kofi Wampah, the MP, who is also member of the Finance Committee of Parliament said, ‘Since 11 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.’
He indicated that ‘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 20 August, 2014 for instance, Kwaku Kwarteng, who is well versed in monetary issues, said, ‘The Bank of Ghana published the selling rate for the United States Dollar as GH¢3.03.’
He stated, ‘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, Royal Bank, SGS, UBA, all quoted rates in the neighbourhood of GH¢3.80 to the US Dollar.’
Meanwhile, he indicated that international exchange rate information sources such as Bloomberg, XE, Yahoo Finance and Oando, published rates as GH¢3.80 to the US Dollar, which reflected official currency prices in the Ghanaian banks and in the Ghanaian currency market.
For him, ‘The conduct of the Bank of Ghana constitutes ‘Multiple Currency Practice’ which 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.’
Dr Mahamudu Bawumia, the 2012 vice presidential candidate of the New Patriotic Party (NPP), had expressed similar sentiments in what he considers to be a ‘deliberate attempt by officials to massage the true state of inflation and depreciation of the Ghanaian cedi.’
According to him, while the local currency is trading at an average of GH¢3.80 to the dollar among banks, official figures had deceptively pegged the exchange rate at GH¢3.03 in what Dr Bawumia alerted was an attempt by the Bank of Ghana to ‘fix’ the exchange rate.
The BoG, he said, ‘Would have us believe that since June 17 this year, the exchange rate of the cedi to the US dollar has remained unchanged at some GH¢3.03 per US dollar,’ and has thus, ‘remained fixed at this rate over the last three months.’
Aside that, Mr Kwarteng noted, ‘This situation could create problems in our economy.’
This, he said, was in view of the fact that the National Petroleum Authority (NPA) determines fuel prices on the basis of Bank of Ghana’s exchange rate figures; meaning ‘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,’ he noted.
Apart from that, the Obuasi MP noted that ‘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).’
He therefore, warned 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 damning consequences for investor confidence in our economy.’
As the regulator of Ghana’s banking industry which is required to instil sanity in the country’s monetary system, Kwaku Kwarteng said, ‘This conduct by the Bank is extremely worrying,’ adding that ‘The Bank is opening the gate for the intervention of Parliament or the law courts.’
But he noted, ‘Intervention by such state institutions in such an operational matter will compromise your independence as a central bank.’
By Charles Takyi-Boadu
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