Chartered Economist explains what BoG’s domestic gold purchase will mean for currency

Chartered Economist, Emmanuel Amoah Darkwa, has welcomed the Bank of Ghana’s decision to purchase domestic gold to augment its gold reserves and shore up the country’s foreign assets.

He believes that this move will strengthen the country’s currency as compared to other major currencies worldwide.

He made this known during an interview with Happy FM’s Don Prah on the ‘Epa Hoa Daben’ show when he said: “There is a relationship between the strength of your currency and the gold reserve you have. So, adding more to your reserve through the purchase of gold can strengthen our foreign reserves, this will in turn support our local currency as compared to the other major trading currencies”.

He noted that developed countries such as America, Germany and the US all have one thing in common; gold reserves and that has boosted their economies.

He expressed confidence that with the addition of gold reserves to our foreign reserve, the country will have diversified reserves we can rely on when other reserves lose their value.

For the first time in about 60 years, the Bank of Ghana (BoG) has purchased gold to augment its gold reserves and shore up the country’s foreign assets.

The bank bought 280 kilogrammes of the precious metal this year under a historic gold purchase programme meant to double its gold reserves and supplement the traditional ways that the country has built reserves over the years.

It has since set aside GH¢200 million to be used to purchase 540kg of gold produced domestically this year.

Although gold purchase is a critical component of central banking across the world, the

BoG only returned to the business this year after exiting it around 1961.

It now aims to buy more than 17,500kg — about 17.54 tonnes — of the precious metal in the next five years.