Ghana to begin utilizing gold as an alternative of U.S. greenback to purchase oil

Ghana to begin utilizing gold as an alternative of U.S. greenback to purchase oil

Saturday, November 26, 2022

Ghanian Vice President Dr Mahamudu Bawumia
Photograph Credit score :Information Ghana

The Ghanaian authorities has introduced that it’s going to start utilising gold, as an alternative of {dollars}, to buy oil merchandise in an effort to deal with the difficulty of the nation’s declining overseas trade reserves.

Ghana’s vice chairman, Mahamudu Bawumia, made this announcement in a Fb put up on Thursday. He added that the choice was made to satisfy the rising greenback demand from oil importers, which has considerably devalued the native foreign money and raised dwelling prices.

The vice chairman claimed that utilizing gold would forestall the trade fee from instantly affecting the value of gas or utilities as a result of home distributors would now not want overseas cash to import oil gadgets.

“The demand for overseas trade by oil importers within the face of dwindling overseas trade reserves ends in the depreciation of the cedi and will increase in the price of dwelling with greater costs for gas, transportation, utilities, and so forth. 

“To handle this problem, the Authorities is negotiating a brand new coverage regime the place our gold (fairly than our US greenback reserves) might be used to purchase oil merchandise. The swap of sustainably mined gold for oil is among the most essential financial coverage adjustments in Ghana since its independence,” the Fb put up partly learn.

He defined that if the brand new coverage is put into place, it’ll basically alter the stability of funds and significantly reduce the continuing foreign money depreciation, which has led to will increase within the prices of gas, energy, water, transportation, and meals.

 “It’s because the trade fee (spot or ahead) will now not instantly enter the method for the willpower of gas or utility costs since all of the home sellers of gas will now not want overseas trade to import oil merchandise,” he added.

This announcement comes just a few weeks after a Blomberg report ranked the nation’s foreign money alongside the Nigerian naira because the world’s two worst-performing currencies, with the naira dropping 37 per cent of its worth in opposition to the greenback and the cedi dropping 55 per cent.

In October, the Ghanaian cedi was rated because the worst performing foreign money on the earth after it misplaced 45.1 % of its worth to the U.S. greenback this 12 months.

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