Dr. Ernest Addison
Dr. ERNEST Addison, Governor of the Bank of Ghana, has indicated he is confident about the reserves his outfit has amassed so far.
According to him, the local currency was likely to remain stable throughout this year especially considering some measures planned about to be implemented by government this year.
The cedi, which depreciated by 3.8 per cent against the dollar in 2020, outperformed many of its peers on the African continent last year, particularly in the face of the unfolding coronavirus pandemic.
The cedi began the year 2020 trading at GH¢5.54 to a dollar. By the middle of 2020, it was trading at GH¢.67 to a dollar, closing trade at the end of year at GH¢5.76 to the dollar.
Dr. Addison said he believed measures to be employed by the Central Bank and other government agencies should help to stabilise the cedi throughout the year.
“We were looking at building reserves to the tune of $300 million. The question is whether the $300 million is sufficient to enable us guarantee a stable exchange rate in 2021. Obviously, it will help, but it will not be the only solution. As you know, the government has indicated its intention of going back to the capital market in 2021, so all of that will help us to keep the cedi stable,” he said.
Government’s ability to secure a $3 billion Eurobond facility last year before the full impact of the Covid-19 pandemic as well as the coming in of the US$1 billion IMF RCF facility were cited as factors that ensured the availability of foreign exchange on the market and the eventual stability of the local currency in 2020.
Going further, Dr. Addison mentioned that most first quarters witnessed an increase in demand for foreign exchange which led to some depreciation, but he was confident the reserves amassed should mitigate the seasonal demand.
He added, “Our currency goes through a seasonal pattern in the first quarter of every year. We see quite a peak demand in the first quarter of every year. We are hoping that the reserves that we have built can help us mitigate that seasonal demand.”
– Citibusiness