Vice President Dr. Mahamudu Bawumia has made suggestions on efforts to stabilize the value of the Cedi in relation to gold in an effort to protect the local currency from depreciation and deal with ongoing foreign exchange issues.
This comes after the Bank of Ghana successfully completed a domestic gold purchase program, during which it purchased 65.4 tons of gold worth US$5 billion, greatly increasing Ghana's gold holdings.
Speaking on Thursday at the Royal Ghana Gold Refinery's opening in Accra, Dr. Bawumia said the new foreign exchange strategy will guarantee the Cedi's long-term stability.
"Next year, I would like to suggest a new foreign exchange regime management architecture for Ghana, wherein the cedi's value, with all of our contributions, will be anchored to gold." Our foreign currency management has to be moved, and I think gold would be the finest anchor for the Cedi. We should tie the Cedi to gold, in my opinion.
"I am putting out a framework, which we will talk about with the central bank, naturally. We'll see where this goes. However, the structure I'm suggesting is rather straightforward. After considering what we have done, the Bank of Ghana's gold purchase program ought to be the primary conduit for any substantial demand for gold.
"I am putting out a framework, which we will talk about with the central bank, naturally. We'll see where this goes. However, the structure I'm suggesting is rather straightforward. After considering what we have done, the Bank of Ghana's gold purchase program ought to be the primary conduit for any substantial demand for gold.
"Using our gold stockpiles to fulfill FX demands is basically a straightforward process. When gold is used to anchor the Cedi and fulfill demand, the country will have a large amount of excess foreign exchange reserves that may be used for other purposes.
The Vice President said, "But then you will maintain long-term exchange rate stability, which will be anchored on gold, and then we will move forward."
The Vice President said, "But then you will maintain long-term exchange rate stability, which will be anchored on gold, and then we will move forward."
The Bank of Ghana's assessment of economic and financial data indicates that, as of July 2024, the Cedi has lost 19.6% of its value in relation to the US dollar.