The withdrawal of foreign exchange for the import of non-essential commodities including rice could constrain foreign exchange liquidity and worsen its demand-supply disparity.
The Bank of Ghana announced the withdrawal of foreign exchange support for the import of what the government classifies as non-essential commodities. They included rice, poultry, cooking oil, among others.
Though analysts such as Databank Research welcomed the initiative as the government strives to preserve its dollar reserves, they believe the move could constrain foreign exchange liquidity.
Against this backdrop, they anticipate the depreciation of the local cedi to intensify in the retail market, while seeing gentle movements in the interbank market this week.
The cedi closed weaker last week, depreciating by 1.69% to the dollar. It also lost 3.54% and 4.01% to the pound and the euro respectively.
BoG directs banks to withdraw foreign exchange support for importation of rice, vegetable oils, others
The cedi closed trading last week at a bid/ask rate of ҃¢13.10/ؓ¢13.11 to the US dollar on the interbank market and ¢14.5/¢15.00 at the forex bureau market.