Heads of universal banks and the Association of Forex Bureau Operators have agreed to work in close collaboration to stem the rapid depreciation of the Ghana cedi in the country.
This followed a high-profile meeting between the Bank of Ghana (BoG), the leadership of universal banks and Association of Forex Bureau Operators in Accra yesterday.
The meeting, the first of series of engagements brought together stakeholders within the foreign exchange market to deliberate on how to streamline, sanitise and provide clarity on the supply of forex in the country.
In his opening remarks, Governor of the Bank of Ghana (BoG), Dr. Ernest Kwamina Yedu Addison acknowledged that though the global economic meltdown occasioned by the geo-political tension between Russia and Ukraine has caused supply-demand imbalances in several commodity markets, high inflation, high-cost of living and high uncertainties in financial markets, the BoG is poised to work with relevant stakeholders to stabilize the foreign exchange market and help contain the fall in value of the cedi.
“Available data indicate that we started the year 6 cedis to the dollar. It got to 7 and we stayed at 7 in June, 7.6 in July, 8 in August, 9.6 in September and now it is 12. 5. But we are here again with people sending messages that the dollar cedi rate is 15 cedis to a dollar.
“Clearly this type of movement does not deflect changes in the fundamentals. It is clear that the market is not functioning properly. We are seeing speculations taking over under very disorderly market conditions and it appears now the black market is rather driving exchange rates. This we cannot allow to continue,” he said.
Present at the meeting were Managing Directors (MDs) of Ghana Commercial Bank (GCB), Fidelity Bank, Ecobank, Societe General, Absa, Stanbic, First National, Bank of Africa among others as well as heads of the Association of Forex Bureau Operators.
The leadership of the banks blamed the rapid depreciation of the cedi to a wide array of issues. Most prominently, they attributed it to the uncertainties surrounding the future of Ghanaian bonds.
They said the ongoing discussions between government and the International Monitory Fund (IMF) for a $3 billion loan facility is increasing speculations over Ghana’s debt sustainability status.
Even though the Bretton Woods Institution has maintained that any talk of debt restructuring is dependent on an ongoing Debt Sustainability Analysis (DSA), investors according to the banks, have begun cutting their losses and moving their investments into safe havens, a move that is contributing to the rapid depreciation of the local currency.
They called on the BoG to employ adequate mechanisms to regularize forex brokers in a way that will ensure their efficient supervision and prevent the sale of foreign currencies at exorbitant prices.
Accordingly, Dr. Addison assured the leadership that BoG is taking steps to restore order in the forex market by making sure the interbank market takes full control of the forex market to enforce regulations surrounding forex trading so as to streamline the supply of forex in the country.
Members of the Association of Forex Bureau Operators commended the Central Bank for its role in clamping down on illegal forex dealers also known as “Black Market” in a move to sanitize the sector and ensure licensed forex operators deal in exchange transactions.
The BoG Governor charged the association to be law compliance and cautioned them to desist from determining forex rates which has contributed to the speculation of rates thus creating unnecessary panic in the market.