The Bank of Ghana (BoG) is intensifying its efforts to curb illegal activities in the forex market. It announced plans to enforce regulatory compliance among banks, and forex bureaux, in a bid to clamp down on black market operators.
During a press conference to announce the retention of the policy rate at 29%, BoG Governor Dr. Ernest Addison detailed the measures being implemented to combat illicit forex market activities, which the Bank suspects are contributing to the depreciation of the cedi. Dr. Addison noted.
“The exchange rate has recently come under some pressure, especially in the forex bureaux market.”
He highlighted the Bank’s awareness of illegal activities and said it was collaborating with the Financial Intelligence Centre to sanitise the foreign exchange market. “We will step up
monitoring of Forex bureaux to ensure compliance with their regulatory framework,” he stated. He therefore warned all Forex Bureaux advertising rates outside their premises and on social media to immediately desist from the practice.
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Additionally, Dr. Addison announced the establishment of a task force to monitor compliance among Forex bureaux.
The cedi has depreciated by approximately 14.6% against the dollar on the interbank market and over 19% in the retail market. Currently, the dollar is selling at 15.75 at some forex bureaux, while the interbank market opened at 14.75 to 14.85 levels. The BoG’s explanation for Cedi’s depreciation aligns with previous statements from market watchers and Finance Minister Dr. Mohammed Adam.
Dr. Addison explained that recent exchange rate pressures stem from “a weakening of the current account surplus due to higher import demand and lower export revenue, particularly a sharp decline in cocoa export earnings.”
He also noted that robust public spending on Independent Power Producer (IPP) arrears and capital expenditure has contributed to the pressure on the
dollar.
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In recent weeks, the BoG has taken steps to directly address the foreign exchange needs of some corporate institutions, reducing “the pipeline demand” from commercial banks. The Central Bank is also working with the Ghana Association of Banks to streamline documentation requirements for foreign payments to minimise the incentives to resort to informal markets.
Dr. Addison reaffirmed the Central Bank’s commitment to stabilising the cedi but warned against statements that could undermine confidence in the economy, particularly in an election year.
“The foreign exchange market is also affected by sentiments and pronouncements,” he
cautioned. The coming days will reveal whether these measures and statements will effectively halt the depreciation of the cedi and significantly reduce its rate of decline.
