The Chief Executive of Dalex Finance Ken Thompson has asked the Bank of Ghana to revise its practice of injecting dollars into the economy to stabilize the cedi whenever the value falls.
The Bank of Ghana recently released some $120 million onto the market to curb the cedi’s depreciation but market watchers doubt this attained the desired results.
This is coming in the wake of accusations that some commercial banks instead used the dollars released, to balance their books.
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.
But Mr Thompson said this among other reasons only highlight the need for a paradigm shift in the Central Bank’s approach to curbing the perennial fall in the value of the cedi.
“The moment BoG says it is pumping in money that policy makes the cedi unstable because we all know the Central Bank does not have unlimited resources.
“Let the cedi get to where you can defend it; wherever it is let is get there and defend it,” he said.
Mr Thompson said in as much as depreciation hurts business cedis volatitlity is worse as it does not give room to plan.
He said the Central Bank’s action would fuel speculation as the general public gets worried once they hear the announcement of BoG supporting the cedi.