The Central Bank says it expects the cedi to stabilise against major international currencies especially the dollar by the end of March this year.
Market analysts have said the cedi has depreciated by a little over five percent to currently be trading at around GHC4.50.
According to the Bank of Ghana (BoG), the challenge can be attributed to activities of speculators, demand surge to finance imports and recent developments in the economy.
Speaking to JOYBUSINESS, Head of Treasury at the BoG, Evelyn Kwatia said some of the additional measures that the bank is introducing could even see the local currency appreciate against the dollar at the end of the first quarter of this year.
These measures include; falling on short-term facilities with other international banks and bilateral dollar support to help address current challenges facing the cedi.
“We have some short-term measures that BoG would always deploy. Most of the flows into the country comes in the third to the fourth quarter so the first two quarters we deploy the facility to fund the imports, by the third and fourth quarter we are able to pay off,” she said.
She added that BoG started the FX auction last November where they auction foreign currencies.
So far, about six auctions have been done with BoG “doing the bi-laterals where we address unexpected demand on the market.”
According to Mrs Kwatia, the Bank ended last year with a gross reserve of about 3.5 percent a month import cover to build up more. I think the market should be rest assured that the Central Bank has enough reserve to provide liquidity so they don’t need to rush to buy foreign currency,” she said.
She also assured businesses not to panic as the BoG has adequate reserves to stabilize the cedi.
“The huge thing we have to address is speculation as a lot of the demand we are seeing is speculation based and not real demand,” she noted.
She said people are demanding the dollar now although they do not need it “because they think that the current depreciation would continue in perpetuity but I am assuring all that this is just a blip which would be corrected.”
Mrs Kwatia said there is no need rushing to buy the dollar especially when they do not not need it.
The Central bank warns that it would take action against banks that are using dollars released onto the market for other purposes.
JOYBUSINESS is learning some commercial banks are using dollars released by BoG onto the market to balance their books, rather than giving it out to businesses.
This has caused some market analysts to question the effectiveness of BoG’s recent interventions to stabilise the cedi, but Mrs Kwatia tells JOYBUSINESS they will move quickly to stop this practice.