Business News of Saturday, 9 June 2012

Source: --

Closing Foreign Currency Accounts Will Not Solve Economic Woes

An Economics Lecturer at the Kwame Nkrumah University of Science and Technology (KNUST), Mr. Kwaku Boateng is advising the Bank of Ghana against its decision to close all Dollar accounts in the country, saying that it is not in the right direction.
He is rather advising the central bank and the ministry of finance to get the basics right so as to promote confidence in the cedi and to send a positive message to the financial markets to ensure the inflow of foreign currency.
The lecturer who was speaking with focus news’ Bernard Buachi in an interview Wednesday said this move (closing foreign accounts) has been employed by many countries in the past but has been unsuccessful.
“If you decide to close dollar accounts, you cannot prevent people from buying foreign currency from the forex market and keeping it under their pillows or sending it elsewhere”, he said.
He also adds that it will send a message that the central Bank is panicking and lead to speculative activity and hence cause people to do a panic buying of foreign currencies thereby defeating the purpose for which it was imposed.
He says it might look good in the short term but will not have any positive effect in the medium to long term, adding that “it will do nothing to stabilize the Ghanaian currency”.
-Bernard Buachi,
Focus FM, KNUST- Kumasi