As part of measures to address the depreciation of the Ghanaian cedi, government has established a foreign exchange development committee.
The Committee is mandated to review the current FX regime as well as identify the inherent constraints in the system.
Speaking at the launch of the Committee, Deputy Minister for Finance, Charles Adu Boahen, said the Committee is expected to recommend workable alternative policies and programmes, which would potentially reduce forex risk in the economy.
“The operations of the Committee would not infringe on the independence of the Bank of Ghana in its FX operations, but are rather to complement it,” the Minister assured.
As at the end of September 2019, the Cedi had fallen to the Dollar cumulatively by about 9.0 percent, compared to 7.81 percent in the same period in 2018. It depreciated by 4.87 percent against the Euro and 5.66 percent against the pounds relatively to 4.38 percent and 7.57 percent in the same period of 2018.
The BoG itself has implemented a new directive for the forex market, which forms part of a series of deliberate actions taken by the central bank to deal with the speculative nature of the market, and keep the exchange rates from spiraling.
The central bank is also considering the buying and holding of gold, which would further help increase the foreign reserves of the country. Indeed, in times of exchange rate volatility between the major international trading currencies, gold is considered as a safe haven.
In line with Ghana’s medium-term debt strategy and consistent with the 2020
macro fiscal framework, government projects a ceiling of not more than US$ 3.0 billion for international capital market programme for 2020, to be secured through a Eurobond issuance, most likely before the end of the second quarter of the year.
Government in coordination with the Bank of Ghana undertakes periodic bond buyback operations to ensure orderly redemption of domestic debt held by foreign investors. This will help mitigate the unintended consequences of occasional outflow surges of foreign capital – the most recent being what occurred during the first quarter of 2019 – and its impact on the domestic currency.