The Managing Director of CAL Bank, Mr. Frank Adu Junior has expressed optimism in the cedi, predicting that the local currency could make some gains against the dollar by close of the year.
Speaking to journalists at the sidelines of the bank’s’ Facts Behind the Figures’ at the Ghana Stock Exchange, Mr. Adu explained that the relative stability in the power crisis, coupled with the decline in crude oil prices on the world market will help cut down the demand for dollars to purchase the commodity, while it boosts the country’s foreign exchange reserve.
“A significant component of the demand for dollars in this country is what we require for oil, we were bringing in oil for thermal plants, we were bringing finished products for our vehicles and generators,” he said.
He explained that, currently, there is sharp decline for crude oil by half the initial demand that was recorded during the recent energy crisis.
According to him, the development has resulted in a corresponding decrease in the demand for dollars.
“Now you have a fairly stable electricity supply, you have Aboadze giving you 125 million cubic feet of gas , then you have the price of oil itself go down to around 45 dollars per barrel; so beyond the fact that the price has more than halved , the demand in quantity has also gone down so you have a saving of about a billion dollars,” he said.
Mr. Adu maintained that the drop in the demand for a billion dollars will provide enough space for the Bank of Ghana and a government to cut down on expenditure in the procurement of the product, leading to adequate supply of foreign exchange.
“Once that is happening then it means that the cedi is going to continue to be stable, because the supply now exceeds the demand,” he said.
According to him, the bank’s projections further showed that the cedi will make some substantial gains against the dollar by the end of 2016.
“When we do our modeling we figured out that between now and the end of the year, the cedi should be strengthened,” he stressed.