The depreciation of the Ghanaian cedi against the US dollar continues its upward trend on the commercial forex market, with the loss in value nearing 10% for the first four months of 2024.
Since the beginning of the year, the cedi has experienced marginal depreciation marking a year-to-date depreciation of approximately 9.37%.
However, this marks a significant decline in the 22.73% depreciation recorded as of April 2023.
In real terms, the exchange rate of the cedi to the dollar by commercial banks has reached an all-time high, pegged at GHS 13.055 to a dollar, compared to GHS 11.55 during the same period last year.
Data on the two-week average Bank of Ghana interbank USD/GHS rate indicates that the cedi’s depreciation against the dollar stood at 1.69%, 0.98%, and 1.77% for January, February, and March 2024, respectively despite fresh dollar inflows and forex auctions to Bulk Oil Distribution Companies (BDCs) by the Bank of Ghana.
Some analysts are projecting a potential reversal of the cedi’s fall in the first half of the year.
Others fear that the cedi’s performance could contribute to an upward trajectory in inflation.
The Bank of Ghana is expected to auction $120 million to BDCs in the second quarter of 2024 to stabilize the cedi, although ongoing demand for dollars by businesses could pose challenges to this effort.
Despite maintaining the policy rate at 29%, with lending rates averaging over 32%, concerns persist regarding the broader implications of currency volatility.
However, the Governor of the Bank of Ghana, Dr. Ernest Addison, expressed optimism at the last Monetary Policy Committee meeting, stating that the cedi is expected to remain relatively stable against the US dollar.
He cites strong reserves built from improved remittance inflows as a cushion for the local currency in the coming months.
