The Governor of Bank of Ghana (BoG), Dr Ernest Addison, has ruled out a possible fixed cedi-dollar exchange rate despite the local currency’s perennial depreciation.
Dr Addison made the remark following a push by some importers for the fixed exchange regime to help deal the blips in the cedi’s value to the major trading currencies.
The Governor told Joy Business that because of the structure of the economy, setting a fixed exchange rate will not be a good idea.
“We have admitted that a flexible exchange rate better serve the need of the country,” he said.
The Governor was quick to add that despite the over 8.39 per cent depreciation of the cedi against the dollar, the cedi is doing better than other currencies.
The local currency recently crossed the dreaded GHS5 mark, trading at GHS5.02 against the US currency.
This was because demand for dollars by businesses to help finance their imports picked up strongly.
However, it appears there has not been enough dollar support on the market to deal with this challenge that businesses are facing.
Figures from the Bank of Ghana shows that cedi depreciated by 8.39 per cent for last year. Within the first month of 2019, the local currency has hit 2.39 per cent depreciation.
There have also been concerns about why the Bank of Ghana has not actively supplied dollars on the market even though the country’s reserves are said to be over $7 billion.
But the Governor has maintained that there is the need to be strategic with that type of intervention to ensure that all the country’s international reserves are not depleted.