Bank of Ghana Implements Measures to Strengthen Foreign Reserves Amid Cedi Depreciation
Bank of Ghana Implements Measures to Strengthen Foreign Reserves Amid Cedi Depreciation
- The BoG has announced proactive measures to bolster its foreign reserves
- The Central Bank is preparing for an expected increase in foreign exchange demand
- Dr. Adam noted that the cedi has remained relatively stable
The Bank of Ghana (BoG) has announced proactive measures to bolster its foreign reserves in response to the ongoing depreciation of the cedi against major currencies.
With the festive season approaching, the Central Bank is preparing for an expected increase in foreign exchange demand, aiming to stabilize the local currency.
Currently, the cedi is trading at nearly GH¢17 to one U.S. dollar, reflecting a significant year-to-date depreciation of 24.3 percent. To address these challenges, the Bank is focused on enhancing reserves to reassure businesses and consumers of greater stability in the cedi.
At the launch of The Concise Law of Banking, authored by legal practitioner Afua Appiah-Adu, Dr. Ernest Addison, Governor of the Bank of Ghana, highlighted the importance of building reserves to mitigate fluctuations in the cedi’s value.
He stressed that these measures are crucial for ensuring economic stability and maintaining confidence in the financial system. “We are making progress, and the developments we are witnessing are consistent with trends in other jurisdictions. We must remain focused on implementing appropriate policies and building buffers to support our progress,” Dr. Addison noted.
In late October 2024, Finance Minister Dr. Mohammed Amin Adam expressed optimism regarding the cedi’s resilience amid rising foreign exchange demand, particularly with the holiday season on the horizon.
He underscored recent efforts to bolster the nation’s foreign currency reserves and secure international financial support to alleviate pressure on the cedi.
During recent IMF meetings, Dr. Adam noted that the cedi has remained relatively stable and reaffirmed the government’s commitment to continue stabilizing the currency.
He acknowledged that increased foreign currency demand typically arises as the year comes to a close, driven by heightened import and business activities.
To meet this demand, Dr. Adam affirmed that the BoG has taken measures to strengthen the country’s foreign exchange reserves. He stated that the Bank has accumulated “significant reserves to meet the demand” and anticipates further inflows from international financial institutions in the coming months.
According to the Bank of Ghana, Gross International Reserves increased by US$1.58 billion to US$7.50 billion at the end of August 2024, providing approximately 3.4 months of import cover.
Net International Reserves also rose by US$1.73 billion, reaching US$4.92 billion during the same period.
The increase in Gross International Reserves was primarily driven by the strong performance of the domestic gold purchase program.
The country is expected to receive US$360 million from the International Monetary Fund (IMF) following board approval on December 2, along with US$300 million from the World Bank through its Development Policy Operations (DPO) series.
These funds are anticipated to further bolster the nation’s foreign currency reserves and contribute to maintaining exchange rate stability into early next year.
