Falling T-Bill Rates Driving Investors Toward US Dollar – Kwamina Asomaning Warns—-Kwamina Asomaning, Managing Director of Stanbic Bank and President of the Ghana Association of Banks, has raised concerns over the unintended effects of Ghana‘s recent treasury bill (T-bill) rate reductions. While recognizing the potential benefits for the economy, Asomaning pointed out that the drop in T-bill rates has led to an increased demand for US dollar-denominated assets.
“The drop in the T-bill rates is a good move and should be encouraged by players in the banking industry, however, the development has brought some sudden pressure on the cedi as investors consider the American greenback as a safe haven to get returns on their investments,” Asomaning stated.
This shift towards the US dollar, considered a more stable investment, reflects broader concerns in the financial sector that the lower T-bill rates could be fueling capital flight, further destabilizing the local currency. The demand for dollar-denominated assets is seen as a response to the volatile nature of the cedi and the diminishing returns on Ghana’s short-term government securities.
Asomaning’s comments underline the delicate balance between fiscal policy and investor behavior in Ghana’s current economic climate. While lower T-bill rates may help reduce government borrowing costs, the shift towards the dollar could put further strain on the cedi and hinder efforts to stabilize the currency.
The issue of T-bills has been a focal point of debate recently, as the government seems to be celebrating the reduction in rates, hailing it as a positive economic development. However, industry players and analysts have raised concerns, with some even suggesting that the reduction in T-bill rates was an artificial attempt by the government to present an image of progress. This argument escalated further when, contrary to expectations that monetary policy would follow the same trend, the Bank of Ghana surprisingly raised its policy rate instead.
The central bank increased its policy rate by 100 basis points, from 27% to 28%, signaling a tightening of monetary policy to control inflation and curb the depreciation of the cedi. This move directly contradicted the government’s efforts to lower borrowing costs through the reduction in T-bill rates, highlighting a significant disconnect between fiscal and monetary policy.
Analysts are concerned that the sharp reduction in T-bill rates may have unintended consequences, including capital outflows and heightened pressure on the cedi, an concern earlier raised by the Central Bank Governor, Dr. Johnson Asiama.
Last Updated on April 7, 2025 by Senel Media
