Dr Ernest Addison, BoG Govenor
THE CENTRAL Bank has indicated the local currency will not lose its stability this year as has been projected by some institutions.
Reacting to currency media reports that the local currency will go through a tough hurdle this year in its competition with other major foreign currencies, the Bank of Ghana noted that it had put measures in place to help steady the local currency this year.
It said with its strong reserve position, the local currency was on a strong footing this year, particularly given the bank’s forward sale of dollars and other supportive measures.
The BoG continued that with a strong reserve position, it was sure to provide liquidity for market demand, indicating that the foreign exchange forward auction programme had really assisted to contain the demand for the green back last year which it believed would be maintained this year.
The central bank said going by its own internal forecast, the cedi might even perform better than what transpired last year.
Though it remains quiet on its year end projection, it has however given assurance that the cedi will perform well, and urged businesses to be confident of the stability of the local currency.
The Center for Economics Finance and Inequality Studies (CEFIS) has projected that the local currency will be GH¢6.24 pesewas to a dollar by June this year.
Dr. Ernest Addison told the media in Accra in an interview that “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.
Dr. Addison mentioned that most first quarters witness an increase in demand for foreign exchange which led to some depreciation, but he was confident the reserves they had amassed should mitigate the seasonal demand.
“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,” he said.
BY Samuel Boadi