The Governor of the Bank of Ghana, Dr Ernest Addison, has indicated that the pressure on the Ghanaian economy is the reason behind the depreciation of the cedi.
Appearing before the Public Accounts Committee of Parliament, he said his outfit cannot fix the exchange rate if there is so much pressure on the economy.
“It reflects the movement on a day-to-day basis. If there is additional demand for cedis the currency will be restricted. The Central Bank cannot fix the exchange rate, it depends on what transactions have taken place like payments to contractors.”
“Typically that kind of payment can move the exchange rate because some of them immediately convert into foreign exchange. So the exchange really reflects a lot of day-to-day pressures in the economy”, he added.
The cedi has come under immense pressure this month after sustained stability in December 2022.
But Dr Addison is optimistic that the government barter of gold-for-oil policy will help reduce the foreign exchange pressures on the economy as a result of the demand for dollars by Oil Marketing Companies.
The barter of gold for the oil policy regime will enable Ghana to use gold rather than the US dollar reserves to buy oil products.
When successful, it will reduce the rate of increases in fuel prices since the pressure on the cedi will go down.
According to the government, the policy is one of the most important economic policy changes in Ghana since independence.