Vice President, Dr Mahamudu Bawumia has unveiled plans to stabilize the cedi by anchoring its value to gold, a move aimed at mitigating currency depreciation and addressing ongoing foreign exchange challenges.
This strategy follows the success of the domestic gold purchase programme, which has enabled the Bank of Ghana to amass 65.4 tons of gold worth US$5 billion, significantly strengthening the country’s gold reserves.
During the inauguration of the Royal Ghana Gold Refinery in Accra on Thursday, Dr Bawumia emphasized that this new foreign exchange policy is intended to ensure the long-term stability of the cedi.
“I propose a new framework for Ghana’s foreign exchange management, wherein the value of the cedi will be anchored to gold. We need a solid anchor, and I believe gold is the best choice for the cedi. By channelling significant demand for forex through the Bank of Ghana’s gold purchase programme, we can create a balanced system where the exchange rate remains stable.
“For example, if you have GHȼ3 billion and seek forex, the Bank of Ghana could use that amount to purchase gold, then provide the forex. This approach aligns demand with supply, keeping the exchange rate steady.
“By leveraging our gold reserves to meet forex demands, we can maintain long-term exchange rate stability, anchored in gold, while also freeing up additional forex reserves for other national needs,” Dr Bawumia explained.
As of July 2024, the cedi has depreciated by 19.6 per cent against the dollar, according to the Bank of Ghana’s summary of economic and financial data.
Source: AdomOnline
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