Financial Analyst and Director of Business Operations at Dalex Finance, Mr Joe Jackson, has said that the stability of the Cedi against the major trading ones especially the Dollar can be attributed to policy intervention by the government.
He says there is the need to give credit where credit is due hence, his recognition that the government’s intervention stabilised the local currency.
Against the Dollar, per the Bank of Ghana rate as of Tuesday, October 10, the Cedi was buying at 11.2231 and selling at 11.2343.
Against the Pound Sterling, it is trading at a buying price of 13.6910 and a selling price of 13.7059. The Euro is trading at a buying price of 11.8271 and a selling price of 11.8379.
Asked whether the Cedi performance can be attributed to policy intervention by the government while speaking on the Business Focus on TV3 on Monday, October 9, Mr Joe Jackson said “Yes it can, there is a very important policy that took place in December of last year. As of 18 December last year, the government raised its arms and said ‘I can’t pay my debts, I won’t pay any more, I have defaulted and I will remain in default until I can negotiate a new rate with the review.’
“This is a reference to the foreign debtors. Once those were done the important thing was, we stopped having to buy dollars to ship out to our creditors, and this has continued since last year and has been a really important reason why the dollar has stabilized up until now.”
He however identified risk factors ahead which are likely to impact negatively on the Cedi.
“The challenge is this, just now we are about to conclude with the foreign debtors on the treatment and that conclusion will very well mean that we will now go back and start paying our debts which will now put pressure on the Cedi because debt serving is the CEO pressure on the Cedi, wherever we start paying it will add some pressure on the Cedi, that is the challenge. Has it been stable up till now? Yes. Has it been partly a result of a policy intervention? A big yes. Is there a huge risk that the Cedi will experience volatility in the days ahead? The answer also is a big yes.
“A number of things have happened; Number one, we are going to start paying debts. Number two, the cost of fuel is our number one biggest import, the cost of fuel has declined to Ghana up until date, and the prices have remained relatively low.
“Now the prices have started rising and we have just seen an escalation in the Ukraine and Russia war and a new war started in the Middle East, all these things put pressure on oil prices. When you merge that with the winter cold seasons in the northern temperate zone then you are going to have an increase in prices which will hit us hard,” he said.
He stressed, “So the Cedi has been stable and you must give credit to where credit is due, it was due to policy intervention but there are major risks ahead and it is likely we are going to see a lot more volatility in the days ahead.”