The Governor of the Bank of Ghana, Dr. Ernest Addison, is optimistic the Ghana cedi will remain relatively stable against the US dollar going forward.
According to him, this is due to strong reserves built by his outfit over the period.
“This is based some strong reserves that the Bank of Ghana has built over the past months to support the cedi, some fresh monetary measures being implemented, and strict enforcement of the foreign exchange regulations.
“We are now reporting reserves of more than $6.0 billion, and therefore the underlying factors that caused those pressures in the past have improved greatly”, Dr. Addison disclosed.
The Governor also said there had been improved remittance inflows and all these should support the currency in the coming months.
He was responding to a question posed by Joy Business on whether the cedi’s recent woes were over.
Dr. Addison mentioned that the measures instituted by his outfit over the past months, and in 2023, would respond positively.
“We believe that all these developments should give the market some assurance that the cedi’s outlook will remain favourable”.
The local unit has come under some intense pressure against the US dollar especially in the first quarter of 2024.
This has resulted in a depreciation of about 6.8% against the dollar, based on data from the Bank of Ghana.
However, on the retail market the cedi has lost more than 8.0% in value to the American greenback.
The Central Bank on March 25 2024 sold one dollar for GH¢12.85, whilst the commercial banks quoted GH¢13.08 pesewas. The forex bureaus on the hand are selling one dollar for GH¢13.70 on March 26, 2024.
The Bank of Ghana attributed the pressures on the cedi mainly from the strengthening of the US dollar on the international markets, and payments made to the energy and corporate sectors.
“These were compounded by delays and uncertainties associated with the second tranche of the cocoa loan inflow and World Bank’s disbursement of budget support”, the Governor added.
He added that the foreign exchange market came under some seasonal pressures in February 2024 and early March 2024, but the Ghana cedi continues to recover its value.
Cedi’s outlook
The Governor said the pressures on the cedi have been mitigated somewhat by the continued inflows from remittances and mining companies and from the Domestic Gold Purchase Programme.
“Inflows from the World Bank, the tight monetary policy stance, and a weaker US dollar from potential policy rate cuts in the USA are expected to support the relative stability of the Ghana cedi”, he pointed out.
The Governor also talked about the revised cash reverse ratio, and strict enforcement of the foreign exchange regulation that he believes will support the cedi performance in the coming weeks.
