\n
The\u00a0Bank of Ghana\u00a0(BoG) has moved to calm the forex markets, with Governor Dr. Ernest Addison assuring that the central bank has built up \u201cenough reserves to tackle the pressures\u201d that have been battering the cedi in recent weeks.<\/p>\n
Speaking at the launch of the new commercial paper market, Dr. Addison acknowledged that the cedi has faced \u201csome headwinds\u201d after a period of relative stability. However, he indicated that the BoG is \u201cgiving much attention\u201d to the issue and possesses the firepower to intervene.<\/p>\n
\u201cThe exchange rate has been generally stable until recent weeks when some headwinds have been observed in segments of the market. But this is receiving much attention as the bank has built up enough reserves to tackle the pressures on the market,\u201d Dr. Addison stated in a speech read on his behalf.<\/p>\n
The assurances come as the cedi has taken a pounding in 2024 amid soaring corporate dollar demand and a resurgent U.S. currency. The local unit has fallen by around 14 percent against the greenback since January.<\/p>\n
Financial analysts warn that the outlook for foreign exchange inflows remains clouded, putting further pressure on the stressed cedi in the coming months.<\/p>\n
\u201cThe near-term outlook for FX supply is decidedly negative due to a panel of fundamental factors,\u201d Constant Capital stated in a market review, citing elevated inflation, low cocoa output, and constrained portfolio inflows.<\/p>\n
GCB Capital noted that while gross international reserves grew modestly to US$6.2 billion in March, providing 2.8 months of import cover, usable reserves have dwindled to just US$4 billion \u2013 enough for only 1.8 months of imports after factoring out encumbered assets.<\/p>\n
\u201cThese levels offer limited protection against balance of payment shocks, indicating that the BoG will likely continue redirecting hard currency away from the interbank market to bolster reserves in the medium term,\u201d the firm stated.<\/p>\n
Databank\u2019s weekly updates suggest that the BoG has already injected an estimated US$270 million into the forex market this year through spot and forward interventions, following US$713 million in support during 2023.<\/p>\n
However, analysts believe much more firepower may be required, especially with credit to the private sector described by the governor himself as \u201cweak\u201d due to lenders holding back.<\/p>\n
In a bid to spur bank lending, the BoG recently introduced a \u201cdynamic cash reserve ratio\u201d policy tying required reserves to banks\u2019 loan books \u2013 a \u201cstrategy to create the incentive for banks to undertake effective intermediation.\u201d<\/p>\n
Under the new policy framework, banks with Loan to Deposit Ratios above 55 percent must maintain a 15 percent CRR, those between 40-55 percent face a 20 percent CRR, and banks below 40 percent are subject to a 25 percent CRR.<\/p>\n
For now, all eyes remain locked on the BoG\u2019s forex buffers and its willingness to deploy them amid the cedi\u2019s depreciation.<\/p>\n
Source:\u00a0<\/strong>thebftonline.com<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
The\u00a0Bank of Ghana\u00a0(BoG) has moved to calm the forex markets, with Governor Dr. Ernest Addison assuring that the central bank has built up \u201cenough reserves to tackle the pressures\u201d that have been battering the cedi in recent weeks. Speaking at the launch of the new commercial paper market, Dr. Addison acknowledged that the cedi has […]<\/p>\n","protected":false},"author":1,"featured_media":181687,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9],"tags":[],"class_list":["post-181686","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business"],"yoast_head":"\n
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