News Column

Ghana moves to arrest currency fall after SA and Nigeria

February 6, 2014


The central bank of Ghana has announced a raft of measures to arrest the fall of the country's currency making it the third African nation to do so after after Nigeria and South Africa . In a statement on Wednesday, the bank directed that all transactions in the country should be conducted in Ghana cedis in compliance with Bank of Ghana Notice dated October 10, 2012 . The three have joined other emerging markets in the world such as Turkey , India , Russia , Brazil , Romania among others that have responded to badly to the winding up of the US bond buying program that analysed have coined the 'taper tantrum." The statement also said that cash withdrawals over the counter from FEA and FCA shall only be permitted for travel purposes outside Ghana and shall not exceed US$10,000 (Sh860,000) or its equivalent in convertible foreign currency, per person, per travel. The Economist magazine in its latest report said the Kenya shilling is going to trade at 89 to the dollar. Kenya is the largest economy in East Africa and one of the largest in Africa . Ghana's cedi has seen a notable fall against all the major foreign currencies, a situation, which has triggered mass criticisms from business men, traders, students and pastors. The Bank has also revised rules governing the operations of Foreign Exchange Accounts (FEA) and Foreign Currency Accounts (FCA) with effect from February 5, 2014 . It therefore directed authorized dealers not to sell foreign exchange for the credit of FEA or FCA of their customers. "No bank shall grant a foreign currency denominated loan or foreign currency linked facility to a customer, who is not a foreign exchange earner", the statement further noted. Currency analyst said the measures may have direct impact on businesses and individuals. The measures are meant to stop the 'dollarization' of the economy. Nigeria increased its cash reserve requirements on public sector deposits held by banks by 25 bps to 75 per cent on the 21st of January in a move to arrest a weakening a naira. South Africa hiked its rates in almost 6 years, increasing the repo rate by 50 bps reign in inflation but the rand is still trading at historic lows. The central bank however said it was targeting inflation and not the rand.

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Source: Nation (Kenya)

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