Business / Markets

Top banker recommends yuan in Ghana's forex market

(Xinhua) Updated: 2014-05-28 13:17

ACCRA - A top African regional banking official has recommended the introduction of the Chinese currency, yuan into the Ghanaian foreign exchange market.

Albert Essien, Group Chief Executive Officer (CEO) of regional bank Ecobank Transnational Incorporated (ETI), said the introduction of yuan into the Ghanaian market would also "ease business transactions for Ghanaian traders who do business with China and vice-versa."

"What it (introduction of yuan) will do is to smoothen that kind of business interaction between Ghana and China, and there would be no third currency," the Group CEO pointed out in an exclusive interview with Xinhua recently.

Essien believed that diversifying currency options in Ghana's foreign exchange market was also one way of dealing with the depreciation of the local Cedi currency against the major trading currencies.

The Cedi depreciated 27 percent year-to-date against the US dollar, with inflation hitting 14.7 percent in April.

Ghana's central bank hinted last year it was considering introducing the Chinese currency into local foreign exchange market as the demand for that currency had been rising.

Traders between Ghana and China have to exchange their local currencies into the US dollar before reconverting into the other currency.

"There won't be that third leg again, and perhaps it would make it cheaper, and that's more efficient for Ghana-China business," the Ecobank boss stated.

The volume of bilateral trade between China and Ghana in 2013 decreased by 5.15 percent, compared to a record $5.15 billion and $5.43 billion recorded in 2012, according to China Customs.

The volume of exports from China to Ghana experienced a dip of 17.6 percent to $3.95 billion, while the volume of import from Ghana to China increased by 86.7 percent over 2012 to record $1.2 billion.

Ecobank is one of two local banks with a Chinese business department. It also has Chinese desks in Nigeria, Tanzania and Uganda, with the business growing in all four countries.

According to Essien, the bank took that decision "because China is moving really into Africa."

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