Ghana’s central bank, the Bank of Ghana (BOG), announced on September 30 that it will begin selling gold coins during the first two weeks of October 2024. The coins, denominated in the local cedi currency, are designed to encourage domestic savings and assist in managing money market liquidity. This is the latest monetary tool deployed by the West African nation after its “gold for oil” program launched in late 2022.
Gold Coin Details: 99.99% Purity, Three Sizes
According to a Bloomberg report, the gold coins are issued and guaranteed by the BOG, refined to 99.99% purity. The coins will be available in one-ounce, half-ounce, and quarter-ounce sizes. Residents can purchase them using Ghanaian cedi, with the price determined by the London Bullion Market Association (LBMA) auction price.
BOG Governor Ernest Addison stated: “The Ghana gold coin enables the Bank of Ghana to mop up excess liquidity in the banking sector and will supplement the bank’s bills for liquidity management. It gives those resident in Ghana an additional avenue to invest to reap the benefits of the Bank of Ghana’s domestic gold purchase program.”
Central Bank Has Bought 65.4 Tonnes of Gold, Yet Cedi Keeps Falling
The launch of the gold coin is the latest step by the Ghanaian central bank to boost demand for the cedi. Under the earlier “gold for oil” scheme, the BOG required large gold producers to sell gold to it at a 20% discount. Since that program began, the central bank has acquired over 65.4 tonnes of gold valued at approximately $5 billion.
Despite these efforts, the Ghanaian currency has continued to slide against the U.S. dollar. In June, the cedi’s exchange rate plunged to its lowest level at that time following reports that Ghana’s cocoa production would miss initial projections by about half. As of 2:00 PM EST on September 30, 2024, the cedi traded at around 15.77 to the dollar, setting a new all-time low.
Analysts suggest that gold purchases and coin issuance alone are unlikely to reverse the cedi’s depreciation trend. Ghana still requires comprehensive economic reforms to address shrinking foreign reserves and debt pressures. The actual impact of the gold coin on savings and liquidity management will be monitored by markets.