The renewed depreciation of the cedi has been blamed on the activities of currency specu-lators.
Concerned Citizens for Good Corporate Governance, a grouping of entrepreneurs, corporate executives, professionals and economists, in a statement issued in Accra yesterday said the problem of the depreciation was a result of the desire of currency speculators to make profits from taking dollar trading positions against the cedi.
It said the depreciation could not be blamed on the unsustain-ability of the Bank of Ghana’s recent intervention in the local foreign exchange market.
“Unsurprisingly, many public policy analysts have faulted the Bank of Ghana, asserting that its recent US$ 20 million a day intervention in the foreign exchange market was a waste because it was not sustainable,” it said.
The statement said, “Unfortunately they fail to appreciate the extent to which the central bank’s interventions in the currency markets have stemmed what was becoming a rout of the national currency, which had become completely disassociated from the underlying economic fundamentals that are supposed to determine its value.”
The currency market intervention the statement said served to curtail what would otherwise have been the disastrous consequences of currency speculators who were taking dollar positions in the hope of making huge profits from the cedi’s depreciation against the dollar.
“However the steep depreciation of the cedi during the first half of this year, to about GH¢4.6 to one dollar followed by sharp appreciation in July, to GH¢3.2 to a dollar has created a considerable volatility in Ghana’s foreign exchange market , which is being leveraged by currency speculators for further profits. The slightest depreciation of the cedi is now magnified by currency speculators looking to take profitable positions,” it said.
It pointed out that the cedi’s current fall was not supported by any adverse change in economic fundamentals since it appreciated sharply in July this year as indeed the trade deficit is now at its lowest level in many years.
“All that has changed, in actual fact, is the expectation of the cedi’s exchange rate against the dollar over the short term, especially by currency speculators who want the cedi to fall in order to maximise profits from holding dollars,” it said.
“We wish to point out that those short term expectations are misguided and they are setting themselves up for a collective disappointment,” it said.
It said over the next 60 to 90 days Ghana would receive major forex inflows adding that the upcoming Eurobond issue of US$1.5 billion, would provide huge funding for the countrys forex treasury.
It said another US$1.8 billion would be received through this year’s international syndicated loan for local cocoa purchases.
“In addition to these about US$300 million is still being expected from Ghana’s development partners, having already received a similar amount over the past couple of weeks, and the next tranche of balance of payments support from the International Monetary Fund,” it said
The statement said, “The availability of these inflows can be expected to significantly increase the supply of forex on the market, possibly beyond the levels achieved during the BoG’s recent intervention .These inflows are being supported by government’s on- going fiscal consolidation and the BoG’s tightened monetary stance.”
By Times Reporter