Traders Blamed For Cedi Fall
A Deputy Minister of Finance and Economic Planning, Seth Tekper, has partly blamed currency traders on the inter-bank foreign exchange market as well as importers for the continuous fall of the cedi against major trading currencies.
According to him, most importers, out of anxiety, have purchased the currencies with the intention of selling them later.
'It is natural for anxious traders, in particular, to advance their purchase of the foreign currency. But the underlining numbers should make traders and businesses aware that the inflow of dollars has not changed significantly to warrant some of their actions.'
The local currency since the first half of 2009 has depreciated significantly against major trading currencies, devaluing by about 3.31 per cent earlier this year.
This has resulted in a dollar trading at GH¢1.85 to the cedi.
Over the past few months, the situation has compelled the Bank of Ghana (BoG) inject over $1 billion onto the market to shore up the value of the cedi.
The Central Bank earlier this week re-introduced the 30, 60, 90 and 270-day Bank of Ghana Treasury Bills apart from Government of Ghana's Treasury Bills currently on the market. The move is expected to mop up the excess liquidity on the market and give investors more cedi instruments to invest in.
As part of the measures, commercial banks will henceforth be required to keep a mandatory 9 percent of their total domestic and foreign deposits at the Bank of Ghana in cedis.
The banks are also required to provide 100 per cent cedi cover for all 'Vostro' balances held by their foreign banks in the country at the Bank of Ghana.
Mr. Tekper was speaking on the Super Morning Show on Joy Fm, an Accra-based radio station.
He said 'these interventions by Government and the Central Bank are all aimed at arresting the situation.'
He added that the positive growth in the economy was also putting pressure on the dollar, adding that 'the numerous interventions made by government will soon stabilize the cedi in some few months to come.'
The president of the Ghana Union of Traders Association (GUTA), George Kweku Ofori, in an interview with CITY & BUSINESS GUIDE , stated: 'BoG's intervention is a hoax because we, the affected traders, are not feeling its effects on the ground. They are simply not telling us the truth.'
He added that there is more to the devaluation of the cedi and stressed that there was a 'deliberate attempt by the government and BoG to conceal the actual truth regarding the state of the cedi against the dollar.'
He revealed that ever since the local currency depreciated sharply at the beginning of the year, traders have suffered greatly.
'Because the purchasing power of people is dwindling whereas salaries remain the same, we are recording low sales, a situation which is compelling a lot of businesses to collapse.'
Meanwhile, some financial analysts have suggested that a reduction in the importation of goods and an increase in local production will go a long way to boost the local currency.
By Esther Awuah