Details are beginning to pop up on why the Ghana cedi is performing excellently against the main international trading currencies, especially the United StateS Dollar, the British Pound and Euro.
But the most shocking of these is from Bright Simons, Vice President of policy think tank IMANI Africa, suggesting that the government has broken into the county’s reserves, pumping enormous amounts of the forex into the system to revive the cedi.
In the last two weeks, the Ghana cedi has gained about 63percent against the dollar in particular. But analysts have discredited claims led by President Nana Akufo-Addo, that his government is responsible for the feat, insisting that credit can only be apportioned when the current appreciation is sustained into January and February 2023.
The Herald’s findings are that part of the US$1.3 billion syndicated Cocoa Loan brought in by the Ghana Cocoa Board, is partly responsible for the appreciation. Insiders, at the COCOBOD, have revealed that so far, over US$850 million has been drawn out from the amount and pumped into the local economy hence, the appreciation of the cedi.
It was further disclosed that the latest draw down on the US$1.3 billion syndicated Cocoa Loan, was done some two weeks ago, and the cedi has since then been going well against the international currencies.
However, bankers, The Herald interacted with, have also attributed the performance of the local currency to the fact that demand for the dollar in December by traders, is always low compared to the months of October and November.
To them, this has made it possible for the Bank of Ghana (BoG), to peg the local currency at GH¢8 on the interbank market, since there is no pressure on the dollar.
Also mentioned is that, many importers, have had their capital eroded by the recent surge which saw the cedi massively depreciating to GHC18 per a dollar, hence are not importing as expected. This they argued has kept the few dollars in town at the current rate. Indeed, one of the analysts, The Herald spoke to, claimed that Tema Port is currently empty, as no one is importing goods into the country.
But Bright Simons, who has been observing the new trendhas stated his amazement about the current fast run of the cedi against the dollar, saying it came as a surprise to realize that the government is using its reserves to strengthen the cedi against the dollar.
In a tweet on December 19, 2022, he wrote: “Okay, I was wrong. I told folks at various times that the govt of Ghana will not suspend payments on the external debt until it formally engages creditors on a plan next year. I did not anticipate that it will burn thru its reserves to reinforce a run on the dollar.”Interestingly, the government has associated the appreciation with the announcement of the debt exchange programme and the staff-level agreement reached with the International Monetary Fund.
The President, Nana Akufo-Addo, has stated that the appreciation of the cedi against all major trading currencies is a result of deliberate policy interventions introduced by the government over the last few months.
According to him, “the strengthening of the cedi has not happened by chance, but through the implementation of deliberate policies by Government, in collaboration with the Bank of Ghana.”
These measures, he said, include “cedi liquidity tightening measures, resulting in the offloading of forex, as a store of value, by speculators; the improvement of forex flows from remittances and the mining sector; and the reaching of a staff level agreement with the IMF for a US$3 billion package.”
The President made this known on Sunday, December 18 2022, when he delivered an address at the centenary celebration of the Ga Presbytery of the Presbyterian Church of Ghana, held at the Black Star Square, Accra.
Addressing the congregation, which included the Moderator of the Presbyterian Church of Ghana, Rev. Prof. Joseph Obiri Yeboah Mante, he stated that, with appropriate policy, determination and hard work on the part of Government, things are beginning to turn around.
Whilst acknowledging that the country was by no means “out of the woods yet”, he assured that Government will continue to work hard to maintain and sustain the gains made.
“Indeed, in the weeks ahead, the Bank of Ghana will continue with the purchases of forex from the mining and oil sectors to enhance liquidity supply to the market; continue with the single, unified forex forward auction and some modest targeted bilateral support to critical imports; and the implementation of the gold for oil swap transaction, which will significantly remove forex pressures on the cedi,” the President said.
It is in view of this that he added his voice to those of GUTA, GRTCC and others to appeal to manufacturers, traders and transport operators who, at the height of the cedi’s recent depreciation, increased prices of goods and services, to reduce their prices now that the cedi is re-gaining much of its strength.
“I believe this is not only a fair request, but also a just one, and I urge all of you to join me in this clarion call, so we can all have a more pleasant Christmas,” he added.
