Cedi Rally and Drop in Oil Prices to Drive Pump Price Reductions from May 16
Retail fuel prices in Ghana are expected to decline from Friday, May 16, following a combination of favourable exchange rate dynamics and a downturn in international petroleum product prices, according to the Chamber of Oil Marketing Companies (COMAC).
Dr. Riverson Oppong, Chief Executive of COMAC, told Joy Business that the easing prices at the pump reflect broader macroeconomic tailwinds, including the strengthening of the Ghanaian cedi and a retreat in global benchmark crude prices.
“One of the biggest components in the price derivation of crude oil product prices in Ghana has to do with the forex,” Dr. Oppong said, noting that the recent stability of the cedi has created room for local pricing adjustments. “As we speak now, the benchmark prices are falling as well, and the U.S. dollar is falling. That’s why you’ve seen petroleum product prices coming down—between 15% and 13%, on average,” he added.
The depreciation of the U.S. dollar globally, coupled with weakening crude oil prices, has reduced import costs for domestic oil marketing firms, creating scope for price reductions at the retail level. Dr. Oppong expressed confidence that the downward trend could persist, contingent on continued currency strength and favourable market conditions.
Cedi Rally Gains Momentum
The anticipated fuel price cut follows a sustained rally by the Ghanaian cedi, which appreciated 6.25% against the dollar on the retail market last week, extending its year-to-date gains to 16.29%. The local currency also gained 7.61% against the British pound and 5.81% against the euro over the same period.
At the close of last week’s trading, the cedi was quoted at a mid-rate of GH¢13.60 to the dollar on the retail market, while on the interbank market, it traded at GH¢12.89. The strong performance has been underpinned by a healthy market supply of foreign exchange, with the Bank of Ghana reporting aggregate inflows of US$378.6 million.
Analysts say the currency’s robust showing reflects improved investor sentiment, buoyed in part by recent developments in sovereign credit ratings.
S&P Ratings Upgrade Lifts Outlook
Ratings agency S&P Global upgraded Ghana’s long- and short-term foreign currency sovereign credit ratings to ‘CCC+/C’ from ‘Selective Default’, citing progress on fiscal reforms, economic growth momentum, and an improved external position.
The outlook on both foreign and local currency ratings remains stable. The upgrade marks a vote of confidence in the government’s fiscal consolidation efforts and enhanced public financial management, particularly as the country navigates an election cycle.
The positive ratings action, coupled with central bank support, is expected to further stabilise the cedi and anchor inflation expectations in the near term.
While global commodity price volatility and geopolitical tensions remain downside risks, the current macroeconomic environment appears conducive to easing cost pressures on consumers, with fuel price reductions likely to offer some respite amid ongoing inflationary challenges.
