Governor of the Bank of Ghana (BoG) Dr Henry Wampah has downplayed fears that the cedi’s recovery will not be sustained.
The cedi begun making some significant gains against major foreign currencies including the dollar, British pound and Euro two weeks ago after depreciating in excess of 25 percent this year.
According to the Bank of Ghana the local currency recovered strongly against the major currencies in July 2015.
The cedi was trading at 4.33 to the US dollar as at June 30, 2015 (year-to-date depreciation of 26.2 %).
However, as at July 14, 2015 it was trading at GH¢3.31 to the US dollar (year-to-date depreciation of 3.4%).
Despite the impressive recovery there are fears the cedi will go back to its losing ways due to the central bank’s approach in dealing with the cedi’s recovery.
The central bank as part of moves to shore up the value of the cedi begun pumping huge tranches of dollars into the economy.
According to the bank of Ghana depending on the level of demand and supply between 20 and 50 million dollars can be injected into the economy in a day but not necessarily daily.
But some economists and industry players have criticized the central bank over the move saying it will not be able to sustain the huge injections of cash and the move will also not save the cedi in the medium to long term.
The Chief Executive Officer of Dalex Finance Ken Thompson for example earlier told Citi Business News sustaining the cedi’s current performance cannot be guaranteed due to volatility in the economy.
‘The volatility is what scares people and not the depreciation because the cedi’s appreciation is not sustainable; we may sail through this year but what happens next year, we give too much credence to the issue of speculation and hoarding of dollars; most people trade because this country has been turned into a nation of shopkeepers’. He fumed.
But Governor of the Bank of Ghana Dr Henry Wampah says the central bank has put in place measures to ensure the cedi’s recovery is sustained.
‘The stock of gross foreign assets at the end of June 2015 was $4.5 billion, enough to finance 2.9 months of imports of goods and services. Going forward, the anticipated inflows of more than US$4 billion from the Eurobond issue, syndicated cocoa financing as well as other programmed inflows in the second half of the year will provide a strong buffer and help sustain stability in the foreign exchange markets. …sustainability is two ways what we do is that we stand ready to support, sometimes you may pump in more than the 20 million sometimes less depending upon what the market can take’.