BoG will not fix cedi rate but act against excessive volatility —Governor
Governor of the Bank of Ghana, Dr. Johnson Pandit Asiama, has defended the recent depreciation of the cedi, insisting that the central bank’s focus is not to maintain a fixed exchange rate but to prevent excessive volatility in the foreign exchange market.
Speaking at the 130th Monetary Policy Committee press briefing in Accra on Wednesday, Dr. Asiama said the cedi is expected to fluctuate under Ghana’s managed float regime.
“First of all, we have always said that the framework we have is a managed flows, it’s not a fixed exchange rate again. So the cedi is expected to move all right on a daily basis,” he said.
“Expect the cedi to move, it can depreciate, it can appreciate our concern is to avoid excessive volatility.”
The Governor attributed recent pressure on the local currency to rising global uncertainties, higher crude oil prices, and seasonal foreign exchange demand linked to dividend repatriation by companies.
According to him, geopolitical tensions and trade disruptions have increased the foreign exchange needed to finance imports, particularly petroleum products.
“What that means is the same volume of crude oil is costing about twice more by way of foreign exchange, so you can imagine why there’s greater demand on FX,” he stated.
Dr. Asiama also explained that May typically records stronger dollar demand as companies and banks make dividend payments to foreign investors.
“When those dividends are being sent out, they don’t send cedis. We want to send US dollars, and it’s the same demand, is the same exchange rate that’s to take the impact,” he noted.
Despite the depreciation pressures, the Governor said the central bank remains confident in Ghana’s reserve position and its ability to contain sharp currency swings.
“So long as we have the buffers, so long as we continue to add, it doesn’t matter. The cedi, let it flow, let it move,” he said.
“What we will ensure is that we won’t see a return to the kind of volatility we saw in a number of years past.”
