Cedi ‘faces arrest’ as BoG set to release $600m cocoa loan funds onto market
The Bank of Ghana is set to release the full amount of the cocoa loan syndication onto the market. This was after the first tranche of the cocoa loan syndication hit Bank of Ghana’s account on Thursday, October 4 2018.
Sources say about 600 million dollars has hit the Central Bank’s account.
Sources say the Bank of Ghana is taking this action to see whether the current problem facing the cedi can be dealt with by releasing a significant amount of dollars onto the market in the short term.
JOYBUSINESS understands that even though the regulator is planning to surrender all the dollars onto the market that would be guided by real demand from businesses.
This is to help finance their imports and prevent the situation where the funds are not swallowed by those who don’t need it for business purposes.
The Central Bank would usually hold on to these funds to help shore up its reserves. However looking at the current challenges facing the local currency, the Central Bank may want to deal with the situation once and for all.
The second tranche of funds should hit Bank of Ghana by the end of November. This should bring the total amount of funds that would hit Central Bank’s account to 1.3 billion dollars.
Cedi’s performance for this year
Data from the Central Bank show that the cedi has depreciated by more than 7 per cent as at the end of September this year. However other research firms and financial institutions have put the rate of depreciation higher than Bank of Ghana.
For instance, Bloomberg as at 4 October put the year-to-date depreciation at a little over 9 percent. As at the close of the trading on October 4 2018, the local currency was selling at 4 cedis 93 pesewas to a dollar.
This is compared to the 4 cedis 99 pesewas some two weeks ago. For some, this could be an indication that the expected marginal stability is indeed being achieved.
It was the Vice-President Dr. Mahamudu Bawumia who said at a Joy FM event to mark the NPP government’s 100 days in office, that the cedi has been arrested.
“When we came in, it [cedi] was running, essentially we have arrested it [cedi], and the IGP has the keys, he’s locked it up, we want to make sure we pursue sound policies to keep the cedi stable, it has appreciated for this year.“
Since another round of the currency’s depreciation, government has been under pressure to shore up the cedi.