The President of the Ghana Association of Bankers, Alhassan Andani is attributing the cedi’s strong appreciation to some regulatory measures.
Mr Andani believes the Bank of Ghana (BoG) has contributed to how the cedi is currently performing against some major trading currencies.
Speaking to JoyBusiness on the sidelines of the Graphic Business/Stanbic Bank Breakfast Meeting in Accra, Mr Andani said, “It’s been phenomenal. We were all holding our breath for when the cedi was almost touching GH¢5.8 to the dollar. That was frightening and then to see that strong reversal and stabilization, it’s a plus for all of us.”
He added, “I think that whole process has generated a certain understanding of the impact of foreign currency on our exchange rate and we do hope that economic participants will begin to understand that and behave in a manner that supports the stability.”
Mr Andani said, “The bottom line is that we as a country have to package ourselves in goods and services to sell to the external market to bring in the dollars; try as much as possible to minimize our use of the dollars especially to bring in things that we could almost produce ourselves at low cost and bring in only the most essential things that will not be value-adding to whatever we produce domestically or for external markets.”
The Managing Director of Stanbic Bank added, “For me this where, as a country, that is the kind of understanding that we need to have and not just treat the exchange rate as a political instrument. The exchange rate is not political, it is the one price that drives through everything especially in an import-dependent country like ours.”
Mr Andani also thinks the forward forex sales by the Bank of Ghana has also contributed to the cedi’s appreciation against the major foreign currencies “the forward trading has given some expectations of what is going to be available so nobody is rushing to pay a 90-day bill today because he’s not sure whether in 90 days he’s going to get a foreign exchange or not. So that’s every good smoothening process that they [BoG] have introduced.”
The Ghanaian Cedi is expected to trade at 5.54 by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. Looking forward, we estimate it to trade at 5.85 in 12 months time.
Historically, the Ghanaian Cedi reached an all-time high of 5.85 in March of 2019.