Governor of the Bank of Ghana Dr Henry Wampah has defended forex exchange figures from the central bank.
Dr Henry Wampah’s defense follows accusations from a Deputy Governor of the Bank of Ghana Dr Mahamadou Bawumia that the central bank and the Ghana Statistical Service were cooking up exchange rate and inflation figures.
According to Dr Mahamadou Bawumia ‘statistics on exchange rates from the Bank of Ghana and inflation from the GSS are in my humble opinion, not credible’.
Dr Bawumia questioned the forex exchange rate being churned out by the Bank of Ghana.
‘Where in Ghana today can you buy a dollar at close to GHC3.03? The large spread between the Bank of Ghana exchange rate and the interbank exchange rate indicates that the Bank of Ghana rate is being administratively set and not market driven. The BoG exchange rate is unchanged even in the face of an increase in the pipeline of demands for foreign exchange that it cannot meet. Price should normally increase when demand exceeds supply but this is not what we are observing in the BoG forex market’
But reacting to Dr Bawumia’s assertion at a press conference after the Monetary Policy Committee (MPC) meeting on Wednesday, Governor of the Bank of Ghana Dr Henry Wampah, said such figures were churned out because there was low trading and liquidity.
”The way we determine the exchange rate now is that we have a platform which is the Reuters platform and then is the rate on the platform which is the rate at which the banks trade among themselves including Bank of Ghana. It is averaged and that is what gives you the interbank rate which we report. But because of lack of liquidity in the system for about two months there have been no trade at all on the interbank market. So what the banks are doing is just trading with their customers, which is they buy from one customer and give it to another but among the banks there has been no trade and as I said it’s because of the liquidity problems.’
‘ This is also because when there is low liquidity whatever they get they use it to satisfy their customers rather than trade among themselves. The interbank market uses the closing rate as the opening rate for the next day but this a situation where the closing and opening rate has remained the same throughout, so when the central market deals with the market it uses that rate. That is why you’ve seen that stability in the rate’.
By: Vivian Kai Mensah/citifmonline.com/Ghana
