We have enough dollar reserves to deal with Christmas festivities pressures – Dr. Addison
The Governor of the Bank (BoG) Dr. Ernest Addison has assured that there is enough dollar reserves to support the cedi as the Christmas festivities approach in December.
He stated that all measures have been put in place to maintain the stability of the cedi as businesses get ready to import for the yuletide.
“I think that businesses have to trust the Bank of Ghana when we say that we have enough reserves”, Dr. Addison said in response during a media engagement after the Monetary Policy Committee in September 2024.
The pledge was made after some commercial banks hinted that the demand for dollar has gone up due increase in imports ahead of the festive seasons.
“The market should be rest assured that we have the ability to step in to support the demands coming from businesses and individuals and there is no need for them to panic”, he reiterated.
BoG’s International Reserves
The BoG’s International Reserves has increased by US$1.58 billion over the past months to reach US$7.50 billion ending August 2024.
This is equivalent to 3.4 months of import cover. On the other hand, Net International Reserves has also increased by US$1.73 billion to US$4.92 billion at the end-August 2024.
The BoG has linked the higher build-up in the Gross International Reserves on the account to a strong performance of the domestic gold purchase programme.
Cedi’s performance
Dr. Addison noted that the Ghana cedi has been relatively stable in recent times after coming under pressures in May and June.
“This is due to tight monetary policy stance and improved forex liquidity support” he explained.
“From the beginning of the year to September 25, 2024, the Ghana cedi depreciated by 24.3 percent against the U.S dollar. In the second half of the year the cedi has witnessed a slower pace of depreciation of 7.1 percent”, he added.
He stated that COCOBOD’s inability to raise money through foreign syndicated loan will not affect the fortunes of the cedi in December.
“Through the Gold Purchase Programe we have been able to buy a lot of Gold, that we can fall on to support the local currency” The Governor added
“Therefore, we don’t expect the impact to be that bad on the local currency” he noted
Cash Reserve Ratio Review
There have been serious concerns about the impact of the increase of the Cash Reserve Ratio on the operations of commercial banks.
However, Dr. Addison argued that the data suggests the monetary policy decision has achieved what it was intended for.
“The reason why the policy was initiated is to manage liquidity and to get the banks that are not lending to review their stances and that is actually working”
He added that the policy has also helped to check inflation.