BoG’s decision to release more dollars to stabilize cedi good—Economist

Economist Dr. Lord Mensah has described the decision by the Bank of Ghana (BoG) to add a minimum of $800 million to Ghana’s reserves in an attempt to stabilize the Cedi against the dollar as a step in the right direction.

The cedi has weakened by 8.6 percent this year (2019).

The Bank of Ghana says it will add a minimum of 800 million dollars to the country’s reserves this month to stabilize the cedi against major international currencies especially the dollar.

According to the Central bank, the buildup of the US Dollar would help in increasing Ghana’s net international reserves to about $ 4 Billion dollars, an amount that will boost confidence in the system and assist in stabilizing the local currency.

Speaking to Citi Business News, Dr. Lord Mensah said although the government must pay attention to investing in more long term measures the move by the central bank is needed in such a time when the Cedi is struggling against the dollar.

“The Central bank understands what it is doing and knows that an amount like eight hundred million dollars is enough to stabilize the cedi at the moment, it will however come at a huge cost in terms of where they will get the money from to do that.”

“Governmnet must however do more to come with long term measures to deal with the depreciation of the cedi”.

Dr Lord Mensah further called on the Central Bank to regulate the activities of forex bureaus in the country as he believes, the free market is a major contributing factor to the cedis’ free fall.

“I do not see why we have so many forex bureaus in the country, elsewhere in order to have access to foreign currencies you will have to go to a bank. I believe it is time the central bank to reduces the number of forex bureaus in the country because the free market in which they are operating is accounting to the cedis depreciation” Read Full Story