The First Deputy Governor of the Bank of Ghana, Dr Maxwell Opoku-Afari, has argued that the Bank of Ghana and the Finance Ministry should be commended for the relative stability of the Cedi in the last three-and-a-half years.
According to him, fiscal and monetary reforms introduced by the two institutions were responsible for the stability of the cedi.
He said over the period, the performance of the Ghana cedi against the US dollar had been topical among economists as well as political actors.
Out of some 15 key currencies on the continent, the cedi had remained relatively stable, going down by only negative 2.86 per cent from January 2020 till now.
“We entered 2020 with a very solid foundation in terms of gross international reserves accumulation. We ended 2019 with about $8.4 billion in terms of gross reserves, which was about four months of import cover and that is the highest we have ever had, which shows that we have enough cushion to be able to stand any external vulnerabilities.
“If you look at previous years, most of the time the currency moves a lot in the first five months of the year but this time, we entered the year with this solid level of gross international reserves,” he said.
Speaking to Philip Nanfuri on Accra-based MX24 TV, the Deputy Governor said one of the reforms was the Forward Auction Market, introduced in the last two months of 2019, whose full implementation began in the first quarter of 2020.
That, according to him, allowed people to buy foreign exchange ahead of time, which reduced market sentiments.
Commenting on other factors that had contributed to the stability of the cedi, Dr Opoku-Afari mentioned the $3-billion Eurobond from the capital market and the $1billion advanced to the country by the International Monetary Fund (IMF).
“On top of that, through proper timing and a wind of chance, we happen to go to the Eurobond market just before the pandemic hit and got in $3 billion to add to the gross international reserves that have built up. In addition, when the pandemic hit, Ghana accessed $1 billion from the International Monetary Fund as part of the Rapid Credit Facility to address the COVID,” Dr Opoku-Afari said.
“So when you put all these together, it positions the Central Bank to be able to have enough reserves to support the currency, going forward. That is why in the first four months of the year, we saw an appreciation of the currency, whereas in …. comparable years back, we saw significant depreciation,” he added.