The Bank of Ghana (BoG) has reiterated its resolve to stabilize the cedi’s exchange rate, amidst the unabated depreciation against the dollar.
BoG in its Monetary Policy Committee Press Release on Monday, May 27, announced that it possesses sufficient foreign exchange reserves to support the market.
It advised economic agents to refrain from speculative purchases, warning that they would incur economic losses when the market corrected itself.
“The Bank of Ghana remains fully committed to providing stability in the exchange rate for the cedi. The Bank has enough foreign exchange reserves to support the market and economic agents should stop engaging in speculative purchases as they will suffer economic losses when the correction occurs,” the BoG stated.
The BoG noted that the exchange rate has recently experienced some pressure, particularly in the forex bureaux market.
“The pressure in the foreign exchange market reflected increased demand for higher imports, energy sector payments, and uncertainty surrounding the progress of debt restructuring negotiations with external creditors,” it added.
The BoG indicated that these conditions have influenced sentiments and led to additional pressures.
“On a year-to-date basis, the Ghana cedi depreciated by 14.6 percent against the US dollar as of 22nd May 2024 compared to 21.8 percent depreciation for the first five months of 2023,” it added.
The Ghana cedi continues to lose ground to the major trading currencies for the past weeks week, especially the US dollar.
Meanwhile, Finance Minister Dr. Mohammed Amin Adam expressed optimism about the stability of the Ghana cedi.
He is confident of reversing the Cedi’s free fall against other major currencies, which has affected the prices of goods and services.
Dr. Amin Adam assured that the Ministry of Finance was working with the Bank of Ghana to implement measures to address the Cedi’s depreciation.
He emphasized the progress of the cedi since 2023, asserting that the currency has exhibited stability against major currencies.
“But for recent pressure, we see on the exchange rate movement, the exchange rate has been largely stabilized over some time with the depreciation of the cedi against the US dollar halving from 52.2% at the end of November to 27.3% at the end of December 2023.
“The cedi’s stability has continued into 2024 with cumulative depreciation of 14.2% as of 20th May 2024 compared to 20.7% recorded in the same period in 2023. So on that basis, we are safe to conclude that the cedi is still very strong. We expect the stability to improve into the medium term as we complete debt restructuring,” Dr. Amin Adam indicated.
Businesses have expressed their frustration over the current state of the cedi.
The cedi was trading against the dollar at GH₵ 11.98 on Monday, May 20.
However, it crossed GH₵ 15.24 at the close of business day on May 16 at the forex bureaus, which are now trading at GH₵ 14.65, resulting in a depreciation rate of close to 20% since the beginning of the year.