But the cedi’s fall has slowed in recent times on monthly basis.
Acting Bank of Ghana (BoG) governor Dr Kofi Wampah, presenting the Monetary Policy Committee report told a news conference that the implementation of recent policy measures have resulted in a “slowdown of the monthly depreciation from 5.9% in May, to 3.4% in June, 0.6% in July and further to 0.3% in August 2012.”
In trade weighted terms, Dr Wampah said the real effective exchange rate depreciated by 4.2% in July 2012 against 1.6% appreciation in the corresponding period of 2011.
When the Ghanaian currency was falling rapidly, the central bank in April 2012 issued new measures to save the cedi depreciation despite raising the policy rate by 100 basis points to 14.5% at that time (April 13, 2012).
The new measures included “the re-introduction of BoG Bills, revision in the application of the statutory reserve requirement of banks and the provision of cedi cover for vostro balances”.
The Bank said the policy rate increase was intended to improve the attractiveness of cedi assets and increase the supply of foreign exchange to the market but “speculative activity of currency traders in the inter-bank foreign exchange market continues to exert pressures on exchange rates, resulting in continuing depreciation of the Ghana cedi”. The cedi depreciated 8% against the dollar in the first quarter of 2012.
The new move took effect May 1, 2012.
By Ekow Quandzie