Governor Addison foresees stability for Cedi amid reserves surge
Dr. Ernest Addison, Governor of the Bank of Ghana, has expressed confidence in the forthcoming stability of the Ghanaian cedi against the US dollar.
Citing a robust surge in reserves amassed by the central bank in recent months, Dr. Addison underscored the pivotal role of the reserves in bolstering the local currency.
With reserves now exceeding $6 billion, the Bank of Ghana’s proactive measures, alongside stringent enforcement of foreign exchange regulations, are anticipated to underpin the cedi’s resilience in the face of prevailing challenges.
Improved remittance inflows further strengthen the currency’s outlook, according to the Governor’s assessment.
The cedi has faced pressures in the initial months of 2024, depreciating by approximately 6.8% against the dollar. Notably, on the retail front, the cedi’s decline against the greenback surpassed 8%.
Attributing these challenges to a variety of factors, including a strengthened US dollar on global markets, disbursements to key sectors such as energy and corporate, and delays in cocoa loan inflows and World Bank support disbursements, Dr. Addison acknowledged the resilience of the cedi amidst these headwinds.
To reinforce the currency’s stability moving forward, Dr. Addison outlined a multi-faceted strategy. This encompasses continued inflows from remittances and mining ventures, support from the Domestic Gold Purchase Programme, and anticipated inflows from the World Bank.
Moreover, the Bank of Ghana’s stringent monetary policy stance and potential US interest rate cuts, which could weaken the dollar, are expected to further shore up the cedi.
Emphasizing regulatory measures such as a revised cash reserve ratio and rigorous enforcement of foreign exchange regulations, Dr. Addison expressed optimism that these initiatives would foster sustained stability in the coming weeks, allaying market concerns and affirming a favorable trajectory for the Cedi.
