Cedi posts 19% depreciation rate against dollar in month of January
Ghana’s local currency, the cedi, has seen a significant depreciation in the first month of 2023, according to data from the Bank of Ghana.
The cedi sold at ¢10.60 to one US dollar on the interbank market in January, compared to ¢8.57 at the end of December 2022, depreciating by a substantial 19.1% to the US dollar in the first month of 2023.
The Central Bank has attributed this depreciation to a 30% drop in the value of the cedi against the US dollar throughout 2022. The cedi also lost value against other major foreign currencies, including a 21.4% loss against the pound and a 20.7% loss against the euro.
This depreciation of the cedi, coupled with the country’s high public debt levels, has led to concerns about the sustainability of Ghana’s economy.
According to the Bank of Ghana, the country’s public debt stood at 93.5% of Gross Domestic Product (GDP) at the end of November 2022. This prompted a debt restructuring, with the Domestic Debt Exchange expected to end on January 31, 2023.
The World Bank, in its October 2022 Africa Pulse Report, projected a debt-to-GDP ratio of 99.7% for Ghana in 2023, and has classified the country as a high debt distress nation. The report cites a widened government deficit, a massive weakening of the cedi, and rising debt service costs as contributing factors to the country’s high debt levels.
In light of these developments, analysts are closely monitoring the government’s efforts to address these economic challenges and stabilize the cedi.
Some have pointed to a recent barter program, which allows for the exchange of gold for oil, as a potential means of easing the pressure on foreign exchange to import oil into the country. However, it remains to be seen whether this measure will have a significant impact on the country’s overall economic situation.
