Central bank takes steps to strengthen local currency
Ahead of its Monetary Policy Committee announcement on Thursday, Ghana’s central bank has announced further measures to strengthen the local Ghana cedi currency in the Foreign Exchange (FX) market.
These measures were contained in the revised rules on the operation of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) in the country.
The local currency of Ghana, world second largest cocoa producer has depreciated cumulatively by between three percent and four percent from January 2014 to date, with research by the Standard Bank of South Africa predicting a 15 percent cumulative depreciation by the end f the year.
The cedi depreciated by about 24 percent cumulatively last year, and the Standard Bank commented that the ongoing weakness in the cedi suggests the modest fiscal tightening embarked by government in 2013 was insufficient to against recent monetary easing.
The new rules are intended to streamline the operations of these accounts and bring about clarity and transparency in their operations as well as ensure compliance with Bank of Ghana Notice on the pricing, advertising receipts and payments for goods and services in foreign currency in Ghana, according to the notice issued by the bank here on Wednesday.
“No cheques or cheque books shall be issued on the FEA and FCA, while Cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed 10,000 U.S Dollars or its equivalent in convertible foreign currency, per person, per travel,” the revised rules signed by the bank’s secretary, Caroline Otoo insisted.
It also instructed that Authorized dealers shall not sell foreign exchange for the credit of FEA or FCA of their customers, with transfers from one foreign currency denominated account to another are also abolished.
The bank also instructed that all transfers outside Ghana from FEA and FCA shall be supported by relevant documentation.
“Foreign exchange purchased for the settlement of import bills shall be credited to a margin account which shall be operated and managed by the bank on behalf of the importer for a period not exceeding 30 days,” it required.
The bank further banned the granting of foreign exchange denominated loans or a foreign currency facility to customers who are not foreign exchange earners, asking that all undrawn foreign currency denominated facilities be converted into local currency with the coming into effect of this notice.
Source: Bank of Ghana
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