You are here: HomeBusiness2014 01 13Article 297638

Business News of Monday, 13 January 2014

Source: Reuters

BoG issues new restrictions to support cedi

Ghana's central bank has issued new regulations to improve liquidity in the interbank currency market and shore-up the local currency, its governor Henry Wampah said 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 percent against the dollar in 2013 and sentiment remains bearish mainly due to poor liquidity, traders said.

President John Mahama said last week that stabilising the currency is a priority if government is 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 will also continue to inject dollars into the interbank market as it deems fit.

Commercial banks are required to receive "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 will 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.