A senior economics lecturer with the University of Ghana has said it is time the Central Bank controls the activities of black market operators to stem the depreciating cedi.
Dr Eric Osei-Assibey said the parallel system where people are engaged in the foreign exchange business underground alongside the forex bureaux and commercial banks does not augur well for the local currency.
“To the extent that this has created a parallel rate in the market where the Bank of Ghana is quoting ¢4.7 to $1 but the parallel market is giving about ¢5 to $1 is problematic,” he said at Joy FM’s first Cedi Forum, held at the Economics Department of the University of Ghana.
He explained that the phenomenon is challenging “because the Central Bank seems to be losing control over the informal activities of the forex management.”
The local currency which has been depreciating fast in the last few months and there has been a lot of proposals on how to stem the tide.
The Ghana cedi trades on the interbank market at ¢4.94 to $1 and sells at ¢5 on the black market eating away the capital of exporters, importers and automobile spare parts traders.
The Forum was on the theme ‘Ghana’s depressing cedi depreciation: How do we stem the tide?’
Contributing to the discussion, the Economics lecturer said business people and other multinational who are not getting a good rate from the banking sector would leave to the black market.
He believes it is time the Central Bank checks the management of forex system which he says is not tight enough and lacks transparency.
“This has gone on from time immemorial where we have left the black market to grow without any check…changing money from a forex bureau and not being asked for documentation like identity cards is not good enough,” he observed.
According to him, the lack of a mechanism to track such transactions begs the question having a control over the sector.
“If we don’t tighten the regulations and controls and bring more transparency to the transactions system, it will continue to plague the economy,” he said.
Dr Osei-Asibey also blamed imbalance in trade relations, exporting less and importing more as bringing pressure on the cedi.
“We can also attribute the large per cent of it to microeconomics mismanagement. In the past if you look at the data, you will realise that in most times we have rapid depreciation the currency, we seem to have high fiscal dominant, government overspending and very weak liquidity management from the Central Bank,” he noted.
According to him, with such drivers, a country is likely to have more demand-driven factors that will accelerate the depreciating rate of the currency.
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