Companies warned not to price in foreign currency

The Bank of Ghana, (BoG), has warned companies, institutions and individuals to desist from pricing their goods and services in foreign currency.

Pricing of good service in foreign currencies usually exerts some pressure of the local currency, the cedi which resulting in shard depreciation.

According to a statement issued by the BoG and signed on behalf of the Secretary to the Bank, Ms Alethea Godson-Amamoo “the Foreign Exchange Act, 2006 (Act 723) prohibits the pricing, advertising and receipt or payment for goods and services in foreign currency in Ghana”.

The statement explained that such violations are punishable by summary conviction, a fine of up to seven hundred penalty units or a prison term of not more than eighteen months, or both.

The statement reiterated that the sole legal tender in Ghana is the Ghana Cedi and Ghana pesewa.

The statement comes in the wake of some companies, institutions and individuals dealing in the business of foreign exchange without authorization from the Bank.

The Ghana Cedi was relatively stable against the major trading currencies reflecting stability in the macroeconomic environment and increased foreign exchange inflows. In the year to June 2019, the Ghana Cedi cumulatively depreciated by 8.4 percent, compared with 2.4 percent depreciation over the comparative period in June 2018.

However, against the other major currencies, the depreciation was relatively lower. Against the British pound and Euro, the Ghana Cedi cumulatively depreciated by 7.6 and 7.9 percent respectively, compared with 0.02 percent depreciation against the Pound and 0.3 percent appreciation against the Euro over the same corresponding periods. 

In the outlook, the local currency is expected to remain broadly stable supported by the accommodative policy stance of central banks in the advanced economies and increased foreign inflows.

 On a year-to-date basis, the cedi depreciated by 8.4 percent and 9.0 percent in nominal trade and forex transactions weighted terms respectively, compared to 0.03 percent and 2.2 percent depreciation over the same period in 2018.

In real terms, the cedi depreciated by 3.5, 2.3 and 0.8 percent against the US dollar, the pound sterling and the Euro respectively, on a year-to-date basis. In real trade weighted terms, the Cedi depreciated by 0.79 percent, but appreciated by 5.5 percent in forex transaction weighted terms.