According to Dr. John Kwakye, director of research at the Institute of Economic Affairs (IEA), export and the amount of income it generates are the most important factors in stabilizing the currency rate in Ghana.
He believes that because the central bank does not decide on exports, it is not the role of the Bank of Ghana (BoG) to manage the currency rate.
According to Dr. Kwakye, those who accuse the BoG of failing to stabilize the rate may be speaking from ignorance.
The exchange rate for the dollar right now is 8 Cedis.
Speaking at the 3businesscolloquium organized by Media General in Accra on Wednesday July 6, Dr Kwakye said “The exchange rate is not about monetary policy alone. When people blame Bank of Ghana for not stabilizing the exchange rate, I see that they don’t understand.
“Bank of Ghana alone cannot stabilize the exchange rate, it is about how much export we are producing as a country , how much ae we earning from exports, that one bank of Ghana doesn’t determine it. Of course they can help, they have to work with government to put in polices to do do that. Bank of Ghana just manages the reserves that we all we receive.”
Regarding high inflation, Dr Kwakye further said that the rising rate cannot be tackled effectively with only demand management tool.
He stated that the supply side of the drivers of inflation – food, fuel and exchange rate, should also be targeted by the managers of the economy.
“Inflation is coming mostly from food, fuel and the exchange rate is also a factor, so they are mainly supply side of the factors. That type of inflation, you can’t fight it with a demand management tool effectively.
“So we have said that the central bank and government should to work together to address to target the very source of of the inflation. We are not saying do away with the inflation targeting framework,” he said.
He added “It should still be there but you should also look at the supply side, the cost side that are driving your inflation.”
“In fact, even in the US, UK, they are struggling to keep inflation and this is exactly because we are all facing a different type of inflation now all over the world. So we are saying that here, the central bank and government should work more closely together in fighting inflation.”
Inflation rate in May 2022 recorded 27.6% from the 23.6% recorded in April 2022, the Ghana Statistical Service (GS) announced.
The Government Statistician, Professor Kobina Annim, explained at a press conference in Accra on Wednesday June 8 that the rate of inflations for Transport (39.0%), Household Equipment and Maintenance (33.8%), Housing, Water, Gas and Electricity(32.3%) and Food and Non-Alcoholic Beverages (30.1.6%) were higher than the national average (27.6%).
Regarding food inflation five sub-classes record inflation rates higher than the overall food inflation (30.1%) in May.
The inflation for imported goods was 28.2%, which is higher than the 24.7% recorded for April 2022, while the inflation for locally produced items was 27.3%, up from the 23.0% recorded in April 2022.
