Cedi to stabilize from next week – Charles Adu Boahen
Minister of State at the Finance Ministry, Charles Adu Boahen, has assured Ghanaians and in particular the trading community that, starting next week the cedi will begin to stabilise.
Making the assertion, he noted that, “government has taken steps to ensure that we can address some of the real concerns with regards to making more hard currency available for importers.”
He reiterated government’s decision to entered into an agreement with mining and gas companies to sell their forex to the Bank of Ghana as means of stabilising the cedi.
The Minister’s assurance comes in the wake of the nation’s currency having depreciated significantly in the last six months, reaching a record high of being traded for a single dollar at 10 cedis.
Also, a recent currency performance ranking by Bloomberg classified the Cedi as the worst-performing currency across the globe after Sri Lanka’s Rupee.
Bloomberg tracked the performance of 150 currencies in the world and the Cedi placed last but one in terms of performance since the beginning of the year.
Touching on the recently transferred $750m Afreximbank loan, Mr Adu Boahen stated the $750m loan will help shore up the local currency.
“We want to see the stabilization happening next week. The Afrexim facility should be here by Monday at the latest and that should begin towards the first step toward making sure that the stabilisation occurs,” he added.
Mr. Adu Boahen blamed the depreciation of the cedi on ‘unnecessary speculative activities.’
“We believe that there are a lot of speculative activities that are creating some unnecessary depreciation in the currency,” he said.
In a related development, the Council of State on Thursday held a crunch meeting with the Finance Ministry and top officials from the Bank of Ghana to afford it the opportunity to understand the current state of affairs.
In an interaction with the media, the Chairman of the Council of State, Nana Otuo Serebuor II, said the meeting was held because members of the Council are concerned about the current state of the economy.
“You know the Council of State is an advisory body to the government and naturally we are disturbed like any other Ghanaian over the state of the economy particularly the free fall of the cedi relative to other major currencies,” he explained.
Nana Otuo Serebuor II stated that the underlining causes of the cedi were highlighted and short and medium-term solutions were approved during the meeting.
43% depreciation rate of cedi to dollar projected for 2022
Meanwhile, the cedi is projected to depreciate by 43% to the US dollar for this year.
The cedi’s rate of depreciation against the dollar is however, forecasted to decline to 30% in 2023.
This is according to research agency, Fitch Solutions in its latest report on the country dubbed, “Ghana’s Private Infrastructure Investment Set For Medium-Term Recovery.”
Per the report, the continuing investor concern over the country’s large fiscal deficits puts downward pressure on the cedi.
“We expect weakness for the Ghanaian cedi to persist throughout the near term, as we currently forecast the currency to depreciate by 43% and 30.1% against the US dollar in 2022 and 2023, respectively”.
“We expect that Ghana’s inflation rate will remain high in the near term in the face of spiking global food and fuel prices and as continuing investor concern over the country’s large fiscal deficits puts downward pressure on the cedi”, it stated.
Again, it pointed out that the currency’s weakness will keep revenue risks elevated for foreign investors dependent on revenue streams in local currency.
This is despite an expected $2 billion inflows from the Afrexim Bank and COCOBOD syndicated loan.
