• Login
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
  • Home
  • News
    • General
    • Political
  • Economy
  • Business
    • Agribusiness
    • Aviation
    • Banking & Finance
    • Energy
    • Insurance
    • Manufacturing
    • Markets
    • Maritime
    • Real Estate
    • Tourism
    • Transport
  • Technology
    • Telecom
    • Cyber-security
    • Cryptocurrency
    • Tech-guide
    • Social Media
  • Features
    • Interviews
    • Opinions
  • Reports
    • Banking/Finance
    • Insurance
    • Budgets
    • GDP
    • Inflation
    • Central Bank
    • Sec/Gse
  • Lifestyle
    • Sports
    • Entertainment
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video
No Result
View All Result
No Result
View All Result
NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
No Result
View All Result
Home Business Banking & Finance

Bank of Ghana Sweats to Impress the IMF About Cedi’s Woes

11 months ago
in Banking & Finance, Features, highlights, Home, home-news, latest News
2 min read
0 0
0
221
VIEWS
Share on FacebookShare on TwitterShare on Linkedin

Bank of Ghana Sweats to Impress the IMF About Cedi’s Woes

With less than a week to go before the 3rd review of Ghana’s latest IMF program ends, the authorities are scampering to show how serious they are about the IMF program.

Two recent announcements concern the forex rate (especially for USD-GHS), a stubborn indicator that has so far defied all attempts to paint a rosy picture of the economy.

1. Announcement one says that the Bank of Ghana (BoG) is updating how it calculates the “reference rate” for the country’s forex market.

A. The BoG will factor into the rate all the forex transactions among banks and between banks & their customers (above $10,000) in Ghana. The only “improvement” in this “revamped” model, though, is that the rate will now capture transactions with a cut-off time of 3:30pm instead of the threshold of 2pm in the previous model. 😊

B. Why will the BoG try to present this less than revolutionary change as something epic? The underlying problem is the re-emergence of Nigeria-style “parallel” FX exchange rates in Ghana. The “weighted median” or average rate published by the BoG daily, which is close to the Bloomberg one, has diverged significantly from what real people trying to buy FX on the open market often get.

C. For example, the BoG says the avg USD-GHS selling rate for yesterday was 15.83. Yet, surveys by market research outlets show that forex bureaus were selling above 16.7. If one is lucky enough to get USD from a bank, the rate would have been at nearly 16. Fintech & card services providers quote above 17. Large FX market premiums of this kind are intensely disliked by the IMF because they suggest underlying inefficiency.

RelatedPosts

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns

Troubled Manchester United Boss Amorim Contemplates Future After Grimsby Debacle

African Athletes Shine in 2025 Diamond League: A Celebration of Talent

2. Announcement two is about the BoG trying to give Ghanaians investment & savings alternatives to the dollar by pushing a gold coin product.

A. The whole scheme raises a lot of questions, especially in the light of all the muck surrounding the gold refinery the government is asking the BoG to invest in.

B. Promoting bullion as an investment option to stem dollar demand is a rational decision. The question, however, is scale. A lot of investors have to be convinced. Purely from a technical analysis point of view, gold has one disadvantage compared to the dollar in Ghana’s specific case. Contrary to claims by some researchers that gold is a “zero beta” asset, it actually fluctuates against relevant indices by quite a lot. In short, it is risky.

C. The dollar on the other hand has performed very steadily against the GHS over time. Since 1994, it has always gained value. In May 2023, some lecturers at Tarkwa & Takoradi used ARIMA to forecast USD-GHS rates for 2024 & 2025 at less than 12.5. They got it spectacularly wrong.

D. Thus, while it looks like one can almost always count on getting both the price increase return plus the dollar return by buying gold, history actually suggest otherwise.

E. Eg: if one had bought gold in 2012 & sold in 2015, one would have made a ~72% nominal cedi profit. But buying $ would have yielded ~140%.

F. There is also the issue of BoG simply displacing gold that it could otherwise have sold for USD in the international markets to cater to local investors. In some sense, therefore, the actual USD in circulation doesn’t really change as the BoG has to forgo the benefits of increasing its own USD reserves and focus instead on serving local investors’ appetite for a hedge against the Cedi’s notorious depreciation streak.

G. If the gold coin model does scale, it is likely to cannibalise the treasury bill market more than dollar demand in view of the BoG’s superior credit compared to the Govt of Ghana. It bears reminding readers that in the latest treasury bill auction, the undersubscription rate was more than 40%. It would be interesting to see how the govt would react if the gold coins thing caught on.

Tags: Bank of GhanaBank of Ghana Sweats to Impress the IMF About Cedi's WoesCedi's woesIMF

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I agree to the Terms & Conditions and Privacy Policy.

No Result
View All Result

Highlights

BoG Designates Digital Credit Services as Non-Bank Financial Service

Finance Minister Urges Fairer Global Framework as Africa’s Debt Burden Hits $1.3 Trillion 

UK Pledges Support as Ghana Faces GIABA Assessment Amid Gold Sector Scrutiny

BOST Holds 2025 AGM, Tasked to Deliver Profitability and Support Green Transition

Brussels Airlines Adds 5 More A320neo Aircraft to its Fleet

Bog Governor Hints at $4bn Inflows From COCOBOD Financing Deal to Support Cedi

Trending

Business

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns

August 29, 2025

Ghana Link Assures Stakeholders of Major ICUMS Upgrade to Address Downtime Concerns Ghana Link Network Services Ltd,...

Troubled Manchester United Boss Amorim Contemplates Future After Grimsby Debacle

August 29, 2025

African Athletes Shine in 2025 Diamond League: A Celebration of Talent

August 29, 2025
Governor of the Bank of Ghana (BoG), Dr Johnson Asiama,

BoG Designates Digital Credit Services as Non-Bank Financial Service

August 29, 2025

Finance Minister Urges Fairer Global Framework as Africa’s Debt Burden Hits $1.3 Trillion 

August 29, 2025

Who we are?

NORVANREPORTS.COM |  Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World

NorvanReports is a unique data, business, and financial portal aimed at providing accurate, impartial reporting of business news on Ghana, Africa, and around the world from a truly independent reporting and analysis point of view.

© 2020 Norvanreports – credible news platform.
L: Hse #4 3rd Okle Link, Baatsonaa – Accra-Ghana T:+233-(0)26 451 1013 E: news@norvanreports.com info@norvanreports.com
All rights reserved we display professionalism at all stages of publications

No Result
View All Result
  • Home
  • Business
    • Agribusiness
    • Aviation
    • Energy
    • Insurance
    • Manufacturing
    • Real Estate
    • Maritime
    • Tourism
    • Transport
    • Banking & Finance
    • Trade
    • Markets
  • Economy
  • Reports
  • Technology
    • Cryptocurrency
    • Cyber-security
    • Social Media
    • Tech-guide
    • Telecom
  • Features
    • Interviews
    • Opinions
  • Lifestyle
    • Entertainment
    • Sports
    • Travel
    • Environment
    • Weather
  • NRTV
    • Audio
    • Video

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
NORVANREPORTS.COM | Business News, Insurance, Taxation, Oil & Gas, Maritime News, Ghana, Africa, World
This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.