BoG steps up dollar support for commercial banks as demand increases

The Bank of Ghana (BoG) has stepped up its support for commercial banks to help address the increasing demand for the US dollar by large corporates and other businesses.

The move, according to some bank treasurers, is targeted at sustaining the gains made by the cedi in December 2022.

“We believe this is a timely move by the Central Bank to maintain its hold on the gains made by the cedi in December 2022. We know that at the beginning of every year, demand for dollars go up” a bank treasurer told Joy Business on condition of anonymity.

The support is coming after what some financial observers say is a crucial move, following slow activities on the forex market by the Bank of Ghana in supplying US dollars.

Meanwhile, as Ghana continues its negotiations with the International Monetary Fund (IMF) for a Fund-support programme by the first quarter of 2023, it is expected that the move will further boost investor confidence and strengthen the gains made by the cedi.

Cedi’s performance in 2022

According to Bloomberg, the cedi ended 2022 as the second weakest currency on the African continent with a year-to-date loss of 38.86% to the US dollar.

Globally, the local currency placed 145th. The Sierra Leone Leone came 146th whilst the Argentina Peso and Sierra Lankan Rupee placed 147th and 148th respectively.

They were classified as the currencies with the “Worst Spot Returns” by Bloomberg.

All these countries had challenges with their economies as debt levels had become unsustainable, whilst budget deficits had worryingly enlarged.

In Africa, the Kenyan Shilling (-8.32%), The Gambian Dalasi (-15.28%), Malawian Kwacha (-20.51), New Sudanese Pound (-22.87%), Egyptian Pound (-36.46%), Ghana Cedi (-38.36%) and Sierra Leone (-40.58%) were the currencies with the “Worst Spot Returns”.