Richard Ahiagbah urges Bank of Ghana to tackle forex market abuses amid cedi performance concerns

The Director of Communications for the New Patriotic Party (NPP), Richard Ahiagbah, has urged the Bank of Ghana (BoG) to persistently discharge its regulatory mandate to address abuses in the Forex Bureau market that contribute directly to the Cedi's performance.

He explained that currencies in the Sub-Saharan Africa (SSA) region, including the cedi, have been faltering due to the dollar's appreciation during the first quarter of 2024.

Mr. Ahiagbah commended the Ministry of Finance for containing the impact of an appreciating dollar on the cedi thus far. "The Bank of Ghana must persistently discharge its regulatory mandate to deal with the flagrant abuses in the FX market that contribute directly to the Cedi's performance. We are destined to overcome!" Ahiagbah wrote on his X platform.

Currencies in the SSA Region have been faltering because the DOLLAR has appreciated much of the first quarter of 2024. The Ministry of Finance deserves commendations for containing the impact of an appreciating DOLLAR on the cedi thus far.

The Bank of Ghana must persistently…

— Richard Ahiagbah (@RAahiagbah) May 27, 2024

Meanwhile, the central bank has stated it remains fully committed to providing stability in the exchange rate for the cedi. The Governor of the central bank, Dr. Ernest Addison, said the BoG has enough foreign exchange reserves to support the market, advising against speculative purchases as they will suffer economic losses when corrections occur.

The Bank of Ghana is taking measures to improve market conduct and instill sanity in the foreign exchange market. The Bank has worked with the Ghana Association of Banks to streamline documentation requirements for foreign payments, minimizing the incentives to resort to informal markets.

To address high demand pressures in the foreign exchange market, the Bank has recently taken steps to directly absorb the foreign exchange needs of some corporate institutions, resulting in a reduced pipeline demand from commercial banks.

Addressing the 118th Monetary Policy Committee (MPC) press conference in Accra on Monday, May 17, Dr. Addison said the Bank is fully aware of illegal operations in the foreign exchange market and is working with the Financial Intelligence Centre to sanitize the market.

Foreign exchange bureau monitoring will be intensified to ensure compliance with regulatory frameworks. All foreign exchange bureaus advertising rates outside their premises and on social media platforms must immediately desist from the practice. The Bank has set up a task force to monitor all foreign exchange bureaus to ensure compliance. The foreign exchange market is also affected by sentiments and pronouncements made in this election year, and stakeholders are urged to manage pronouncements that weaken confidence in the local economy.

On fiscal policy, expenditures outpaced revenue growth in the first quarter, reflecting the frontloading of IPP arrears payments. Maintaining strict fiscal discipline for the rest of the year will be crucial to strengthen confidence in the economy. The committee noted that while the implementation of macroeconomic and structural reform policies is consistent with the IMF-supported program, there is a need to ensure that the recent depreciation of the currency does not become embedded in business pricing behavior and inflation expectations.

The strong reserve build-up of about US$2 billion since the beginning of the IMF program, the strong disinflation process, significant progress on fiscal policy consolidation, positive current account balances, and the good progress on external debt restructuring, have all contributed to delivering enough buffers to support the exchange rate.

The latest forecast indicates a slightly elevated inflation profile due to recent exchange rate pressures and adjustments in transportation fares. However, projections show that inflation will remain within the monetary policy consultation clause of 13-17 percent at the end of the year, contingent on maintaining a tight monetary policy stance, including aggressive liquidity management operations.

"Given these considerations, the Committee decided to maintain the Monetary Policy Rate at 29 percent," Dr. Addison said.