Bank of Ghana issues new restrictions to support local currency

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The bank’s governor, Henry Wampah, announced this on Thursday.

The regulations require all commercial banks in Ghana to “actively” quote a two-way pricing of currency exchange and limit the spread on corporate transactions to a maximum of 200 pips.

“We believe these new set of measures, and others to follow soon, are transformational and they will help revamp our interbank market and stabilise the local currency,” Wampah told Reuters of the measures that came into effect on Monday.

Ghana’s cedi slumped around 20 per cent against the dollar in 2013 and sentiment remains bearish mainly due to poor liquidity, traders said.

President John Mahama said this week that stabilising the currency was a priority if government was to enable the private sector to lead economic development. Other priorities include bringing down inflation and the budget deficit, he said.

Macroeconomic instability including a falling currency casts a shadow over Ghana’s economy. The country is viewed as one of Africa’s brightest prospects because of its stable democracy and rapid growth powered by exports of cocoa, gold and oil. 

Wampah said the central bank would also continue to inject dollars into the interbank market as it deems fit.

Commercial banks are required to obtain “no objection” from the central bank for the appointment of treasurers to ensure market standardisation, he said.

“We intend to ensure strict compliance,” he said adding that the central bank would soon announce further restrictions on foreign accounts.

Analysts say the latest measures could significantly improve the interbank market.

“They are transformational and will bring significant improvement into our interbank market, if they are implemented,” a trader at a major bank told Reuters.

The cedi was indicated at 2.3425 – 2.3525 at 1300 GMT on Thursday and traders said they expected it to remain under pressure next week while market participants assess the impact of the new regulations.