Ghana has started the bulk purchase of the yellow metal-Gold, to raise the gold component of its reserves in a bid to strengthen the cedi currency without increasing the inflationary pressures.
The Governor of the Central Bank, Ernest Addison, disclosed this information during a conference on Tuesday, 17th of May 2022.
The CBN boss mentioned, “We have started a bulk purchase program, domestic, where we buy gold locally and try to raise the gold component in our level of reserves. This is where the currency focus is.”
This decision is coming after Ghana recorded a consumer inflation rise to an 18-year record of almost 24% in April, despite persistent efforts to ensure the inflation rates are kept in check and economic recovery is ensured.
Also, the Ghana cedi saw the worst depreciation against the dollar of any currency besides the Russian ruble in the first quarter, that is, between January and March, according to data obtained from Reuters.
However, since then, the currency value has moderately stabilized, though subject to volatility, as it experienced another downturn last week.
The CBN governor has further stated that the other export products of the country such as oil and cocoa cannot sufficiently boost the country’s reserves. Thus, the local purchase of the yellow metal – gold, which is a safe-haven asset, will help strengthen the country’s currency.