{"id":608511,"date":"2019-04-18T10:09:45","date_gmt":"2019-04-18T10:09:45","guid":{"rendered":"
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Business News of Thursday, 18 April 2019<\/p>\n

Source: <\/strong>Graphic.com.gh <\/p>\n2019-04-18\n\n

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Business News of Thursday, 18 April 2019<\/p>\n

Source: <\/strong>Graphic.com.gh <\/p>\n

2019-04-18<\/p>\n

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\"EmmanuelFormer Deputy Governor, Mr Emmanuel Asiedu-Mante<\/span><\/span><\/p>\n<\/div>\n

The Bank of Ghana (BoG) is in a weaker position to ensure that the cedi depreciates at predictable and sustainable rates against its foreign currencies, a retired Deputy Governor, Mr Emmanuel Asiedu-Mante, has observed.<\/p>\n

This is because the bank has fewer options that it could employ to counter any steep fall in the value of the local currency against its foreign counterparts, particularly the US dollar, he told the GRAPHIC BUSINESS on April 16.<\/p>\n

\u201cThe only tool that it (the central bank) has is to fall on reserves that the country has to be able to mitigate the impact of the rate,\u201d Mr Asiedu-Mante, who retired in 2006, explained during the interview which discussed how the country could achieve a sustainable exchange rate to allow for businesses to plan effectively.<\/p>\n

Unfortunately, he said people were unaware of this limitation and as a result \u201coverestimate the influence of the central bank when it comes to the fight against currency depreciation\u201d.<\/p>\n

He said apart from the intermittent \u2018pumping\u2019 of foreign currencies into the market whenever there was a supply pressure, \u201cthe central bank is powerless\u201d.<\/p>\n

The Governor of BoG, Dr Ernest Addison, said in January this year that the central bank used some US$670 million to support the cedi in 2018. In that year, the currency lost about 8.39 per cent of its value to the US dollar.<\/p>\n

<\/b>Forum on depreciation<\/p>\n

Mr Asiedu-Mante, who also sits on a number of boards of financial institutions, was speaking to the paper ahead of the GRAPHIC BUSINESS\/Stanbic Bank Breakfast Meeting on the cedi depreciation.<\/p>\n

This quarter\u2019s edition of the breakfast meeting is scheduled to take place on April 23 at the plush Labadi Beach Hotel and will be graced by Dr Addison.<\/p>\n

It will be on the theme: \u201cAchieving Sustainable Exchange Rate Stability: Our Options\u201d.<\/p>\n

The quarterly meeting is one of the thought leadership initiatives of the GRAPHIC BUSINESS, Ghana\u2019s most authoritative business and economic newspaper, and Stanbic Bank Ghana Limited, the country\u2019s favourite commercial bank, to help stimulate intellectual discourse on pertinent issues affecting the country.<\/p>\n

Some previous episodes had discussed how the country could maximise the gains of agriculture, ways to reinvigorate growth in the manufacturing subsector and the role of pensions in national development.<\/p>\n

The April 23 forum comes weeks after the Minister of Finance, Mr Ken Ofori-Atta, revealed that he was ordered by President Nana Addo Dankwa Akufo-Addo to constitute a bi-partisan committee to find sustainable solutions to the perennial depreciation of the year.<\/p>\n

It is, therefore, hoped that the meeting would start the conversation towards finding a lasting solution to the depreciation of the country\u2019s currency.<\/p>\n

<\/b>Overshooting<\/p>\n

In the first two months of this year, the cedi came under intense pressure from the supply side, resulting in it losing about 16 per cent of its value to the dollar.<\/p>\n

The pressures emanated from foreign bondholders disinvesting from the domestic market at a time BoG was rebuilding reserves to meet the International Monetary Fund\u2019s conditionality on net international reserves.<\/p>\n

In a recent interview with Bloomberg TV, Dr Addison described the depreciation as \u201covershooting\u201d, which he said had since corrected to reflect the current fundamentals of the economy.<\/p>\n

<\/b>Structural changes<\/p>\n

When asked how the country could achieve a sustainable exchange rate, Mr Asiedu-Mante said that would only be possible when we matched foreign currency demand with supply.<\/p>\n

\u201cThe thing to do is to look at what influences demand and what influences supply.<\/p>\n

\u201cIf you are importing more than you are exporting, then you are increasing demand for foreign currencies and your currency is going to depreciate,\u201d he said.<\/p>\n

On the recent reduction in the benchmark values for imports, Mr Asiedu-Mante said the expected increase in imports would mean that demand for foreign currencies would pick up and that could impact negatively on the rate of depreciation.<\/p>\n

He also mentioned weak economic fundamentals such a high fiscal deficit, primary deficit and high inflation and interests and strong repatriation of profits by non-resident investors as other factors that contributed to the depreciation of the cedi.<\/p>\n

As a result, he said the Ministry of Finance needed to work with BoG to cure \u201cthe structural defects\u201d in the economy to help mitigate the rate of depreciation.<\/p>\n

He said it was worrying that the country continued to spend millions of foreign currencies importing rice, beef, poultry and other foodstuffs when it could support farmers to grow them.<\/p>\n

\u201cIf we are able to be self-sustaining in rice production alone, you can save about US$500 million every year,\u201d he said.<\/p>\n

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Business News of Thursday, 18 April 2019 Source: Graphic.com.gh 2019-04-18 Former Deputy Governor, Mr Emmanuel Asiedu-Mante The Bank of Ghana (BoG) is in a weaker position to ensure that the cedi depreciates at predictable and sustainable rates against its foreign currencies, a retired Deputy Governor, Mr Emmanuel Asiedu-Mante, has observed. This is because the bank […]<\/p>\n","protected":false},"author":1,"featured_media":608512,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-608511","post","type-post","status-publish","format-standard","has-post-thumbnail","category-local-news"],"yoast_head":"\nBoG constrained in fight against cedi depreciation \u2013 Asiedu-Mante - Ghanamma.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ghanamma.com\/2019\/04\/18\/bog-constrained-in-fight-against-cedi-depreciation-asiedu-mante\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"BoG constrained in fight against cedi depreciation \u2013 Asiedu-Mante - Ghanamma.com\" \/>\n<meta name=\"twitter:description\" content=\"Business News of Thursday, 18 April 2019 Source: Graphic.com.gh 2019-04-18 Former Deputy Governor, Mr Emmanuel Asiedu-Mante The Bank of Ghana (BoG) is in a weaker position to ensure that the cedi depreciates at predictable and sustainable rates against its foreign currencies, a retired Deputy Governor, Mr Emmanuel Asiedu-Mante, has observed. 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