Talks on direct currency transaction between Ghana and China expected

ACCRA - The Governor of the Bank of Ghana, Abdul Nasiru Isahaku, has confirmed moves by Ghana and China to trade their national currencies.

Addressing the media on the state of the country's macro-economic conditions, Isahaku said the bank was expecting Chinese officials for preliminary talks on the proposal.

Concerning the prospects, the governor said there was the need for education in the market for the cedi - yuan transactions to become accepted.

According to him, the central bank had tried the renminbi market by importing about $20 million equivalent of renminbi but was not well utilized.

"But we actually used physical cash, dollars to get this renminbi but this structure that is being proposed by China is direct cedi to yuan transaction without going through a third party, almighty dollar.

"So there might be some benefits to that but we haven't had any deep conversations on that," the governor added.

Isahaku also confirmed that the central bank had reviewed its policy on the importation of foreign currencies, allowing mining firms, which constitute one of the largest sources of foreign currency in Ghana, to sell their foreign Exchange (FX) earnings directly to the market.

The central bank, the governor said, could then buy the residual, which is what the market cannot take, "and that goes to add up to our reserves. So it is much more measured".

"That approach is much more measured than we've been doing it now. So we think, together with tight policy stance, fiscal consolidation and the confidence that we are clawing back into the economy will all help in strengthening the economy as we move on to the second half of the year," Nasiru added.