Director of Research at the Institute of Economic Affairs (IEA), Dr. John Kwakye has said he supports assertion by a Johns Hopkins Professor Steve Hanke that only a currency board can stabilize the Cedi.

Prof Hanke has consistently called for the creation of a currency board to help address the challenges of the Cedi

In a tweet, he said “In #Ghana, the official inflation rate has surged to a 21-year high of 37.2%/yr. That’s WRONG. Today, I accurately measure inflation in Ghana at 113.56%/yr, a rate more than 3x the phony official rate. To rein in inflation, Ghana must install a currency board, NOW!”

Reacting to his comments, Dr Kwakye said : “l agree with Prof. Hanke that only a currency board-type monetary system can give the cedi lasting stability. We should, however, move progressively towards it. The full modalities can be worked out.”

The Cedi has been struggling against the major trading currencies especially the Dollar but the Bank of Ghana has assured that the woes are in the short term.
The Second Deputy Governor of the Bank of Ghana Elsie Addo Awadzi also said the fall of the Cedi against the Dollar and also the high inflation rate (32.7%) are temporary.

She expressed confidence of a positive outlook for Ghana’s economy.

Speaking at the 21st Annual National RCB CEOs conference on the theme ‘Positioning Rural banking at the Centre of Financial Services delivery in Ghana – the role of stakeholders” she explained that recent global developments have heightened economic and business uncertainties for businesses and individuals. Our domestic economy is not spared from these developments.

The Bank of Ghana, she said is working closely with the Ministry of Finance and other key stakeholders to negotiate a sound economic reform programme supported by the IMF, to stabilise and transform our economy.

“We at the Bank of Ghana are confident about the outlook for our economy. The current high inflation and cedi depreciation are temporary, and we must avoid speculative behaviour that only works against attaining stability sooner,” Mrs Addo Awadzi stated.

Some forex bureaus are selling the local currency between ¢12.50 and ¢12.95 as of Wednesday October 19.

The BoG recently identified five key reasons for the woes of the local currency.

They were “The strength of the US dollar, Investor reaction to Credit Rating Downgrade, Non-Roll over of Maturing Bonds, The sharp rise in crude oil prices and impact on the Oil Bill, Loss of External Financing.”

The central bank went ahead to announce measures introduced to resolve the situation.

They were the “Gold Purchase Program to increase foreign exchange reserves; Special Foreign Exchange Auction for the Bulk Distribution Company’s (BDCs) to help with the importation of petroleum products; Bank of Ghana is entering into a cooperation agreement with the mining companies to provide BOG with the opportunity to buy gold as when it becomes available.

“The Bank of Ghana is supporting the banking sector with foreign currency liquidity to help meet the demand for external payments. The recently approved USD750,000,000 Afrexim loan facility by Parliament, once disbursed, will boost the foreign exchange position of the country and help restore confidence.”

The recently signed 1.13billion dollar Cocoa Syndicated loan was also a measure to shore up the Cedi, the BoG added.