[ 2014-07-24 ]

Banking sector needs $1.5bn - to stabilise Cedi
The banking sector needs about $1.5 billion to
stabilize the local currency, industry
practitioners have disclosed.

As a result of this, some currency dealers have
called for massive injection of dollars, as well
as the British Pound into the economy.

Currently, about GH¢6 is to a pound at some
commercial banks and forex bureaux while the
dollar is almost hitting GH¢4.

Checks with some bank customers indicate that the
banks are quoting far higher than the official
interbank rate approved by the Bank of Ghana
(BoG).

But Dela Quainoo, president of the Financial
Market Association, a body which promotes the
cause of all currencies dealers in the bank, in an
interview with Joy Fm recently in Accra, said
banks were not to be blame for the current
development.

“The value of every currency is determined by
its demand and supply. The Central bank was
basically to supply all the markets with all its
needs; I mean we would have made a lot of search
in terms of banks pricing from the Central bank
perspective but so long as there is a large
deficit between demand and supply, basically on
the back of our fixed cash situation and other
issues as well, it always stands to assume that of
course, the price would be always be higher
because the supply side is very weak at this
point.”

Commenting on what could be done to stabilize the
situation, he said: “As it stands, people prefer
to store their value in terms of foreign
currencies.”

“If you look at what has transpired over the
past week or two, if I should put it that way, the
Central Bank basically tried to increase its
interest rate as well as across the yield curve to
keep people more or less interested in investing
in T-bills.

He continued: “However, it probably has not
yielded the results that we expected because
probably in the minds of people, the interest
demand might not be enough to combat any potential
epic depreciation that may occur on the currency
and therefore people still prefer to store their
value on the dollar.

To be able to keep this, there should be a large
injection of forex exchange probably from Europe,
one that would be done or the cocoa flow that may
come in.”

According to Mr Quainoo, if people begin to feel
the injection in the markets, people’s psyche
would begin to change so they would stop
frontloading their demand.

Source - Daily Guide

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