The value of the cedi has begun strengthening against the US dollar, following its consecutive sharp depreciation against the American currency for almost six weeks.
Joy Business checks at some forex bureaus indicate that the cedi sold at ¢10 or below on Saturday, August 27, 2022 and the price is expected to go down in the coming days.
This is as a result of the $750 million Africa Export-Import (Afrexim) bank loan that came in last week and the actions by the Bank of Ghana (BoG) to close down licensed forex bureaus flouting foreign exchange laws.
Officials of the Central Bank had embarked on some field exercises to check the state of compliance with some bureaus in the metropolis, believing that actions by some operators have been contributing to speculation in the foreign exchange market, hence affecting the stability of the cedi.
A popular forex bureau operator at American House at East Legon in Accra told Joy Business on condition of anonymity that the demand for the American dollar has gone down sharply, hence reducing the selling price.
According to the operator of the bureau, people are not buying the dollar as it used to be before because of the observation that supply has been boosted by the $750m Afreximbank loan and the actions by the BoG to stop some forex bureaus from quoting unnecessary pricing.
“The rate of the cedi to the dollar has been falling since Saturday [August 27th, 2022]. It could be due to the injection of the $750m Afrexim bank loan. Secondly, the Bank of Ghana action which a popular forex bureau at the Airport commercial area, dictating to the market, was closed down has also impacted on the pricing”.
“I think that the rate will further drop in the coming days”, he added.
Meanwhile, some analysts and market watchers believe that the rate of the cedi depreciation will slow down going forward into the future if the government remains fiscally disciplined.
They want to see improved revenue mobilisation, reduction in borrowing and prudent spending on behalf of government.
The huge interest payments by government which is estimated at ¢42 billion in 2022, many described as the major trigger of the rapid depreciation of the cedi, coupled with other factors.
BoG bent on clamping down on forex bureaus contributing to cedi deprecation
The Bank of Ghana few weeks ago indicated it will close down licensed forex bureaus that are not complying with the foreign exchange law.
Head of Financial Stability at the Central Bank, Dr. Joseph France, said his outfit won’t hesitate to clamp down activities of forex bureaus found culpable and operating illegally.
He added that the Central Bank has begun an investigation into various complaints received regarding some forex bureaus that are not abiding by the laws governing foreign exchange.
$750m Afreximbank loan, Cocoa Syndicated Loan to further strengthen cedi
Also, the $750m Afreximbank loan has come in to boost supply of dollars which has reduced drastically the demand for the American currency.
Supported by the Cocoa Syndicated Loan which the first tranche may come in October 2022, that could help further strengthen the local currency against the US dollar, despite the huge imports by traders during the last quarter of the year.
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