BoG pegs Cedi’s year-to-date depreciation against dollar at 14.6%
The Ghanaian cedi has depreciated by approximately 14.6% against the US dollar as of May 2024, the Bank of Ghana has disclosed.
This depreciation is less severe than the roughly 20% loss observed on the retail market, where the dollar is trading at an average of GH¢15, compared to the central bank’s official rate of GH¢13.01 per dollar.
The Bank of Ghana’s May 2024 Summary of Financial and Economic Data reveals that the cedi’s value eroded by 7.7% in March 2024 and by 10.5% in April 2024.
Furthermore, the cedi has weakened by 14.5% against the British pound, trading at GH¢17.70, and by 12.9% against the euro, trading at GH¢15.07.
Finance Minister Dr. Mohammed Amin Adam has asserted that the government, in collaboration with the central bank, is implementing a series of measures to arrest the cedi’s depreciation.
These measures include accelerating fiscal consolidation through spending rationalization and enhanced revenue mobilization, intensifying the gold-for-oil programme, and enacting appropriate foreign exchange interventions by the Bank of Ghana.
Additional strategies involve the reinforcement of the gold for reserve programme and the anticipated disbursement of the third tranche under the second review of the IMF-supported PC-PEG programme, pending IMF Executive Board approval in June 2024.
The government also expects significant financial inflows from ongoing projects, including a $150 million World Bank loan and a $300 million disbursement under the World Bank DPO2, expected in the third quarter of 2024.
The central bank’s recent interventions have ameliorated some of the depreciation pressures on the cedi, bolstered by improved foreign exchange liquidity, particularly in US dollars.
Last week, the Bank of Ghana intervened significantly in the FX market, providing approximately $59 million on the spot market and auctioning $20 million to Bulk Oil Distribution Companies.
These multifaceted efforts by the government and the central bank aim to stabilize the cedi and mitigate further depreciation, reflecting a concerted response to Ghana’s current economic challenges.
