Central Bank increases dollar support to commercial banks to sustain cedi gains
Increasing demand for the greenback [dollar] by large corporates and other businesses coupled with the need to sustain gains made by the cedi last month – December 2022 – has forced the Central Bank to increase its dollar supply to commercial banks in the country.
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.
The cedi suffered a year-to-date depreciation of 54.2 percent against the dollar at the end of November 2022, selling as low as GHS 15 to $1.
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.
The cedi, along with the aforementioned currencies were classified as “currencies with the Worst Spot Returns” by Bloomberg.
The cedi however, made a shocking recovery against the US dollar as of mid-December 2022 appreciating by 63.7 percent in value.
Ghana continues its negotiations with the IMF for a $3bn Fund-support programme by the first quarter of 2023, as the programme is expected to further boost investor confidence and strengthen the gains made by the cedi.
Central Bank makes available to BDCs $60m for fuel imports
The Central Bank achieved its forex forward auction target of $60m in the sale of the US dollar to Bulk Oil Distribution Companies (BDCs) last week.
The 30-day tenor $60m forex auction by the BoG was subscribed by 23 BDCs who through their banks submitted bids ranging from $8.10 to $10.50.
The BoG’s forex forward rate for the auction was $9.55.
The forex forward auctions by the BoG to BDCs is intended to minimise the uncertainty of the future availability of forex and aid price discovery especially for the general pricing window within the downstream sector.
With the exclusive forex forward auction to BDCs by the BoG, prices of imported fuel at the pumps is expected to witness some stability.
