The Ghana cedi will not be devalued, the central bank has said.
Its statement on the matter follows days of speculation about an intention to devalue the currency after Vice President Kwesi Amissah-Arthur recently suggested to countries in the West African Monetary Zone to consider doing so to speed up attainment of convergence for a single regional currency – Eco.
His call was supported by Chief Executive of Dalex Financial Service, Ken Thompson.
Governor of the Bank of Ghana, Dr Henry Wampah, however, told journalists on Monday January 25 after the Monetary Policy Committee’s meeting that the BoG has not given consideration to devaluing the cedi, adding that the Vice President’s comments were not in reference to Ghana, specifically.
“I think it was a general comment. Some section of the press and also some people I talked to generally felt that he was referring directly to the Ghanaian economy. He wasn’t referring directly [to the Ghanaian economy].
“He was talking generally about currencies in the [West African] sub-region. If you note, some of them are fixed, like the CFA Franc, it’s fixed to the Euro, so, they don’t have any control over it. They cannot depreciate it depending on their market conditions or their competitiveness.
“The Nigerian naira has also more or less been fixed for quite a while. So, you see a very big gap between what is in the official market, that is the central bank rate, and also in the forex bureau market and so on. But our rate generally has been floating because the rate changes reflecting the market condition be it speculative or not. The rate continues to change, so, for us, there is really no need to do a discrete devaluation or take a discretionary action on devaluation, because the currency adjusts as and when the conditions change.
“So, in our situation, I don’t think we are faced with a situation of either devaluing or not devaluing. That thing is done according to market conditions, which include cedi liquidity in the market, monetary policy, fiscal policy, and so on. All those things determine what is happening in our market,” Dr Wampah said.