The Bank of Ghana bans unauthorised foreign currency transactions The Bank of Ghana (BOG), has reminded citizens and businesses to cease transacting business in foreign currencies, including pricing of goods and services, and advertising.
Even though the Foreign Exchange Act (2006) (Act 723) forbids pricing or payment in currencies other that the local currency, some institutions and companies as well as individuals continue foreign exchange trading without authorization from banks. BOG stated that it is illegal for individuals to engage in foreign currency business without a license from the regulator. Important to know is that the Bank do not have a license. previously issued this notificationIt is, however, important to remind the Cedi that they are continuing to decline. “Engaging in foreign exchange business without a licence issued by Bank of Ghana; or pricing, advertising, receiving or making payments for goods and services in foreign currency in Ghana, without written authorisation from Bank of Ghana [is a] violation,” the Bank saidThursday “Such violations are punishable on summary conviction by a fine of up to seven hundred (700) penalty units or a term of imprisonment of not more than eighteen months(18) or both.” It also frowned at “black markets”, stating that “the public is hereby notified that the sole legal tender in Ghana is the Ghana Cedi. In partnership with the National Security and Law Enforcement Agencies, the Bank of Ghana will take action against illegal foreign exchange transactions. All offenders shall be dealt with in accordance with the law,” considering that the transactions have led to the depreciation of the Ghana Cedi.
Save the Ghana Cedi from its woes
Ghanaian Cedis dropped by 8.86% to the dollar between January 1, 2022, and February 25, 2022, presently trading at ¢6.60 to one US dollar on the forex market. Analysts have blamed the low performance of the currency on fiscal slippages, rising debts and inadequate revenue, leading to selling pressures by investors in Ghana’s international bonds and reduced access to the international capital markets.
Ghana’s reliance on exporting raw materials and importing finished products contributed to the country’s persistent demand for, and less supply of, foreign currencies. This is why, for a long time, Ghana’s cedi has been depreciating against the other major trading currencies.
The government last month announced a 30%To alleviate economic hardship, the government has reduced salaries of its appointees. Additionally, Ghana’s President, Nana Akufo-Addo said the government will pump $2 billion into the economy to help stabilize the cedi (Ghana’s currency) which has been falling in value to the dollar and other international currencies of trade for the past few months. The Ghanaian cedi is the current currency as of February 28, 2022 worst performing currencyOne of 15 top African currencies, which saw a 7.6% decline in value within the first 2 months of 2022 Conversation reported. Adding that “the first reason for the recent depreciation is the increased demand for foreign currencies since most businesses in Ghana are now recovering from the COVID-19 shock.”