The country’s struggling currency hasn’t lost value against the US dollar for the first time in a long time. The Bank of Ghana has said that the recent improvement will continue because of the steps it has taken and because of the cocoa syndicated loan, which has given the needed buffer.
The cedi lost 25.2% of its value against the dollar in October, going from GH9.6 to US$1 at the beginning of the month to GH13 at the end. However, according to data from the Bank of Ghana, the cedi hasn’t lost any value against the dollar in the last week. As of the end of business on Friday, November 4, 2022, the rate of GH13 to US$1 has stayed the same.
In an interview with the B&FT, Yaw Sapong, the head of the Bank of Ghana’s Other Financial Institutions Supervision Department, said that the cedi’s strength against the dollar can be attributed to recent steps taken by the central bank to crack down on illegal forex activities, also known as “black market operations,” and to close some forex bureaux that weren’t following the rules.
“We know that our work is paying off because the number of people going to forex bureaux has gone up. People who used to get foreign currency somewhere else now use forex bureaux. We’ve also noticed that some of the places where illegal forex traders used to do their business in the open no longer exist.
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“We’ve also seen that the cedi is doing better than before. The value of the cedi has gone up against the dollar over the last few days. Speculation has also gone down a lot, which is one of the things we can say is a success of the Bank of Ghana’s actions,” he said.
He also said that the cocoa syndicated loan will give the bank enough money to cover the foreign exchange needs of large transactions, while the forex bureaus will focus on helping people who need less foreign exchange.
Mr. Sarpong is optimistic that the cedi’s rise against the dollar will continue in the coming weeks, given the measures being taken by the Bank of Ghana and the proposed program with the IMF. He also says that speculation must stop.
“We think the cedi will go up even more thanks to the work we’re doing and the cocoa loan and IMF program that are being proposed. So, we think the cedi will get stronger, and we want people to stop guessing about it,” he said.
In its weekly report, market watcher Aza Finance said that the regulator’s actions are to blame for the cedi’s performance against the US dollar.
“The recovery was helped by a crackdown on illegal FX traders by the Bank of Ghana. “There is still a lot of demand for dollars before Christmas because importers want to pay for goods in time for the holiday shopping season,” a market watcher said.