The Bank of Ghana has indicated its firm commitment to preserve the stability of the cedi going forward, particularly in the first quarter of this year.
This comes after the local currency lost about 3.9% in value to the dollar the whole of last year.
Usually, the local currency goes through some pressures in the first quarter of every year though last year was an exception.
The Central Bank has allotted almost $50 million per auction or sale of $50 million every two weeks to boost liquidity and deepen the foreign exchange market, according to its Auction Calendar for Forex Forward Auction.
This means a total of $300 million will be sold to banks and other businesses for onward transactions in the first quarter of this year.
Senior Economist with Databak Research, Courage Martey told Joy Business that the move is a smart one by the Bank of Ghana to stabilize the cedi this year.
If you look at the target allotment amount for the first quarter of 2021, it shows a bigger amount to be sold on the market compared to how much you expect to sell subsequently. This is the recognition that the first quarter of the year is typically a difficult period for the local currency and essentially the Bank [BoG] had shown firm commitment to the market during the first quarter FX auctions”, he explained.
They [BoG] are prepared to allot $50 million per auction. Now this is two times the allotment amount they will be doing after the first quarter of 221,” he further said.
The cedi has since the beginning of the year lost 0.25% value to the dollar. If this persists, businesses and consumers will need more money to operate and make purchases as prices of some imported goods are likely to go up.