Economic Analyst at Databank Research, Kweku Arkoh-Koomson, is advocating for the Bank of Ghana to enhance its forex buffers to withstand potential shocks, ensuring the continued stability of the cedi.
He asserted that establishing a sustainable reserve will empower the Central Bank to intervene in the face of seasonal shocks that could impact the performance of the local currency.
His statement comes in response to a forecast by IC Research indicating that the cedi might experience an approximate 8.4% depreciation against the US dollar in the retail market this year.
Speaking in an interview, Mr Arkoh-Koomson urged the Bank of Ghana to collaborate with the Development Bank Ghana to invest more in value-addition advancement to improve the country’s export earnings.
“It is very crucial indeed to have a very good FX buffer because it makes you more resistant to external shocks and shocks obligating from financing external debts as well. It is quite crucial to build this sustainable reserve”.
Meanwhile, the Ghana cedi traded unchanged against the US dollar last week at a mid-rate of GH¢12.18/$ on the retail market. The same story emerged on the interbank market.
However, it shed 0.49% and 0.56% week-on-week against the pound and euro respectively.
The foreign exchange market also experienced a decrease in liquidity levels last week as the Bank of Ghana’s supply-side intervention took a pause. But corporate demand remained elevated after the yuletide.
While awaiting the meeting outcome, a positive conclusion will pave the way for Ghana to receive its expected inflows of $1.15 billion from the International Monetary Fund and World Bank. This will potentially ease the pressure on the cedi.