The Chief Executive of the Ghana Association of Bankers (GAB), John Awuah, has attributed the depreciation of the cedi to the US dollar to largely activities of speculators.
According to him, even though stakeholders in the banking sector were expecting some level of depreciation due to the current economic challenges, the rate of depreciation seen in the country could not be totally linked to the real demand by businesses.
“Giving the fiscal gap and current challenges facing the economy and Federal rate hike, we expected the cedi to depreciate, but not by this margin,” MrAwuah said in interview with Joy News on Friday.
He added that the situation was compounded by some persons and companies buying dollars when they did not immediately need the currency to transact business.
“We are seeing situations where a firm needs about $100,000, but will go out and place multiple requests with four different banks,” he said.
This, he said would definitely push the request to $400,000 from one institution when in actual fact the firm needed only $100,000.
“Now the $400,000 dollar request being push out, will drive the rate downwards and cause the Ghana cedi to depreciate further,” he noted.
MrAwuah also rejected assertions that bankers were contributing heavily to the deprecation due to certain practices.
“If a bank is looking for dollars, then it’s mainly for a business transaction. A bank will not go out there to buy dollars,” he insisted.
MrAwuah noted that there was the need to target customers that were demanding dollars without immediate need for the currency.
Headded that banks were not going out to buy dollars and hoard the currency.
“It’s more expensive to hold dollars if as a bank you are not using it for any business transaction,” he said.
The Chief Executive of the Ghana Association of Bankers argued that there was strict regulatory requirements that made it very difficult for commercial banks to hold dollar currency when not needed.
The Bank of Ghana recently announced that it has increased the reserve requirement of commercial banks in the country from 13 per cent to 15 per cent by November this year.
MrAwuah added that commercial banks did not benefit from interest rate hike as the data had actually backed their argument.
On loan disbursement, MrAwuah noted that “banks are worried when rates go up because it has serious implication on debt servicing and even new loans”.
He also rejected assertions that only blue chip companies were getting low rates from the commercial banks in the country.
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