UG Centre projected cedi depreciation
BoG urged to increase forex supply
Implement policies to stablise local currency, Government told
The Center for Economic, Finance and Inequality Studies at the University of Ghana has projected the Ghana Cedi is expected end 2022 at GH¢7.03 to the US dollar.
According to the Center, this projection which it believes is 99 percent accurate is based on the end-year depreciation of the cedi to the US dollar and therefore wants the Bank of Ghana to supply enough forex in order to meet to growing demand for the dollar.
“This view of inadequate supply of forex is gleaned from the wide disparity that exist between Bank of Ghana’s forex quote and the interbank quotes. The similar disparities in quotes among banks at the retail level also indicates the inadequate supply of forex on the market”, the Center is quoted by Joy Business.
The Center further points it is worried that the current forex auction strategy by the central bank is not at the moment helping to meet market demand for forex.
Touching on the medium term, the Center for Economic, Finance and Inequality Studies called on Finance Ministry and Ministry of Trade to expedite action on policies that seek to strengthen the local currency and boost domestic trade.
“The government as the largest purchaser of goods and services must commit to replace a good proportion of its purchases with domestically produced goods. This strategy would go a long way to reduce the imports of such goods and services, hence reduce the demand for forex needed to pay for such goods and services,” the centre pointed.
“In as much as the Bank of Ghana has the mandate to stabilise the local currency, there is the need for a coordinated and a balance monetary and fiscal policy measure between the Bank of Ghana and the Ministry of Finance targeted at stabilising the Ghana cedi. Without a coordinated monetary and fiscal policy management of the local currency, the Bank of Ghana’s effort at stabilising the Ghana cedi would see little success,” it added.
Meanwhile, the Ghana cedi ranked in 14th place among its other peers of currencies in Africa for 2021, a Bloomberg tracking survey showed.
While the cedi recorded significant gains in the first half of 2021, the Bloomberg tracking survey of African currencies classified the local currency in the ‘Worst Spot Returns’ while it placed 3rd in West Africa in terms of performance.