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Bank_Of_GhanaThe Bank of Ghana says it will reintroduce some short-term bills, change bank reserve requirements, and require 100 percent cedi cover for vostro (cash held in

an account on someone else’s behalf) balances held at banks in order to help stabilise the local cedi.

The move comes shortly after the Bank of Ghana raised interest rates and reduced limits on net open positions of banks in an effort to support the currency, which has fallen more than 11 percent this year and hit fresh lows against the dollar.

 

In order to reinforce the monetary policy stance and restore stability and transparency in the foreign exchange market, the Bank has decided on the following measures:

The re-introduction of Bank of Ghana bills in the following tenors: 30-days, 60-days and 270-days. This is intended to support the monetary operations of the Bank of Ghana and provide additional avenues for cedi investments.

There is also the revision in application of the statutory reserve requirement of banks.
All banks will now be required to maintain the mandatory 9 percent reserve requirement on domestic and foreign deposit liabilities in Ghana cedis only. Consequently, banks will no longer hold the reserves in different currencies.

All banks are required to provide 100 percent cedi cover for their vostro balances, to be maintained at Bank of Ghana. This is in line with the provision in the Operational Guidelines Pursuant to the Foreign Exchange Act, 2006 (Act 723) that precludes foreign investor participation in the short end of the money market.

This is also consistent with the 27th March 2012 directive of Bank of Ghana to all banks, the Central Bank said in a statement.

Source;BFT

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