COPEC Urges BoG Intervention as Cedi Plummets

The Bank of Ghana (BoG) must urgently intervene to stabilise the foreign exchange (forex) market following the recent crackdown on black market dealers, according to Duncan Amoah, Executive Secretary of the Chamber of Petroleum Consumers (COPEC).

Mr. Amoah warned that the operation has already triggered significant increases in forex rates within hours, and if unchecked, could lead to a surge in fuel prices. He expressed these concerns while speaking on Joy News’ PM Express Business Edition.

“The swoop on black market forex dealers has had a very dire impact,” he stated. According to Mr. Amoah, the rate moved from an average of 12.3 on Thursday morning to 12.45, then 12.6, and finally 12.7. “As of the time we were leaving the office, they were quoting 12.95 just within a few hours,” he added.

He explained that while interbank rates are generally lower, many businesses are forced to rely on the open market because banks often lack sufficient dollar availability. This reliance makes them particularly vulnerable to fluctuations.

The sudden shift has created fear among traders, who are now hesitant to sell their dollars. “Those who probably still have the dollar are probably unwilling to sell because they think it’s a setup or something,” Mr. Amoah said. He noted that traders who would normally respond to demand are currently holding back, leading to a scarcity of forex.

“Some are unwilling to trade at this point, and so the few who would want to trade would need to cash in,” he explained, highlighting the jump from 12.3 to 12.85, 12.95, and even 12.60 at certain points.

Mr. Amoah cautioned that if the BoG doesn’t intervene, the situation could worsen rapidly. “There’s a danger from today, if they don’t intervene properly, and this trend continues, and then tomorrow you wake up, it is 13, 13.2 or 13.5,” he warned.

He stressed that the fuel market would react immediately to any further depreciation of the cedi. He recalled that the BoG has previously intervened by auctioning dollars to the market, but noted that the amounts offered have decreased over time.

“Years back, we used to do about 80 million, 120, 160 and 200 million at some point,” he said. “Now it has declined to 40, 50 and 60 million.” He pointed out that the petroleum market requires approximately 400 million dollars, and even an intervention of 100 million would leave a significant gap to be filled through interbank and open market sources.

“If the open market behaves the way it is doing, they may not be able to hold prices further,” Mr. Amoah stated. He acknowledged the central bank’s efforts this year, describing their performance as “quite tremendous,” but emphasized the urgency of the current situation.

“This is not a desirable outcome… it is not something we would all want to have,” he said. He urged authorities to thoroughly assess the impact of the arrests and review the operation’s effects on forex trading.

Image Source: MYJOYONLINE