Beginning April this year, Ghanaians transacting business in China will be allowed to trade in the Chinese Yuan along the dollar, pounds, euro to reduce pressures on the local currency, the Cedi, an unnamed source at the Bank of Ghana has disclosed.
The decision by the BoG to ‘lift the ban’ on the use of the Chinese Yuan in Ghana is to allow businesses and banks in Ghana to transact business in that currency in order to shore up the ailing cedi which has been depreciating against major trading currencies.
According to The Al-Hajj’s source, due to expansion in trade between Ghana and China and to forestall a situation where Ghanaian banks and businesses had to change the Cedi to dollar then into Yuan before trading with their Asian business counterparts, BoG will beginning this April allow for trading in the Chinese Yuan, which is currently valued at about 39 pesewas for a cedi on the interbank market.
The Central Bank of Ghana has finalized agreement with Standard bank to open an account for the Chinese Yuan which is expected to aggressively compete with other international currencies like the Dollar, Pounds and the Euro.
The Al-Hajj has gathered that, Ghana unlike Zimbabwe which abandoned it worthless currency in 2009 for Yuan and other three Asian currencies will not do away with its currency, the Cedi.
Zimbabwe has adopted the Chinese currency as its legal tender following years of economic mismanagement and international sanctions led by the European Union (EU) and the United Kingdom (UK).
Thanks to the new policy, Ghanaians and their businesses will now be allowed to open accounts in Yuan, a move by the Ghanaian authorities to fight inflation brought about by the unprecedented depreciation of the local currency.
Zimbabwe’s Central Bank announced on Wednesday it would accept the Chinese Yuan and three other Asian currencies as legal tender as economic relations have improved in recent years.
It previously accepts the US Dollar and the South African Rand as the main legal tender. Their use has helped to stabilize the economy after world-record inflation threw it into a tailspin.
Ghana’s cedi has overtaken the South African rand as the worst-performing currency against the dollar in Africa since last year, according to Ecobank Research.
As of November last year, the cedi had lost 17 percent to the US dollar on the forex market, compared to 16.2 percent depreciation by the South African rand.
The cedi has already depreciated by three per cent against the major international currencies in January this year.
The US dollar, which used to sell on the local foreign exchange market for GH¢2.20 before the 2013 Christmas, is now selling at GH¢2.60, while the British pound, which used to be sold for about GH¢3, is now selling at GH¢4.20.
This alarming rate at which the cedi is depreciating is said to have forced the BoG to have decided to take action against persons and banks that violate foreign exchange regulations.
Among measures being taken by the central bank include the adoption of the Chinese Yuan and the immediate release of US$20m from the country’s reserves to help arrest the fast declining cedi.
Source: Al-Hajj Newspaper/Ghana
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