According to the Summary of Economic and Financial Data by the Bank of Ghana (BoG), the Ghana cedi depreciated by 16.86% in value to the US dollar in the first half of 2022.
The local currency went for ¢7.43 to the US dollar on the interbank market as of 22 July 2022, but over 20% on the retail forex market.
The data says the cedi’s depreciation has pushed Ghana’s debt up.
The latest figures put Ghana’s total public debt stock as of June 2022 at USS 54.4 billion or GH¢393.4 billion.
In dollar terms, the debt dropped by about $4 billion in the first six months, from $58.6 billion in December 2021 to $54.4 billion in the first half of 2022.
In cedi terms, however, the total debt stock within the first six months of this year increased by about GH¢41 billion.
However, the cedi’s depreciation rate slowed down in May 2022 and June 2022 after stern monetary actions from the apex bank coupled with some fiscal measures to halt the free fall in the first four months of 2022.
The measures and actions employed by the BoG included an increase in the policy rate by 2.5 percentage points to 17% in March 2022. Again, it enforced measures such as the increase in the Cash Reserve Ratio to 12%, the reset of the Capital Conservation Buffer to the pre-pandemic level of 3% and an increase in the Capital Adequacy Ratio to 13%.
This move encouraged investors to invest in cedi-denominated assets whilst inflation and money supply were effectively controlled.
However, some financial analysts say one of the major reasons for the depreciation of the cedi is the government’s huge interest payments on borrowed funds.
The cedi is, however, selling at about ¢8.1363 pesewas to the US dollar on the retail market as of today, 25 July 2022.