The Ghanaian Cedi has made marginal gains against major trading currencies, including the US Dollar, according to the Bank of Ghana’s (BoG) rate as of Monday, November 18.
The central bank reports that the Cedi is trading at 15.9670 to a Dollar for purchases and 15.9830 for sales. Against the British Pound, it buys at 20.1631 and sells at 20.1849, while the Euro buys at 16.8504 and sells at 16.8671.
This marks a slight improvement from Friday, November 15, when the Cedi was buying at 16.0720 and selling at 16.0880.
Persistent Pressure on the Cedi
Despite the recent gains, the Cedi has faced sustained depreciation in recent years. The Institute of Economic Affairs (IEA) revealed that the currency has lost approximately 74% of its value against the Dollar over the past three years.
In 2022, the Cedi depreciated by 30%, followed by 27.8% in 2023. So far in 2024, it has lost nearly 29% of its value against the Dollar. The IEA described this as a “huge depreciation by all standards.”
Several factors are contributing to the Cedi’s struggles. These include:
1. Election Uncertainty: Investors are turning to the Dollar as a safe haven amid political uncertainties ahead of Ghana’s upcoming elections.
2. IMF Programme Concerns: Doubts surrounding the future of Ghana’s IMF programme, particularly in light of the election and potential policy shifts under a new administration, are increasing demand for the Dollar.
3. Debt Negotiations: Delays in negotiations with non-Eurobond commercial creditors could slow disbursements under the IMF programme, reducing foreign exchange supply.
4. Weak Cocoa Crop: A subdued cocoa harvest and COCOBOD’s shift to domestic financing have limited foreign currency inflows.
The Finance Minister, Dr. Mohammed Amin Adam, confirmed that the IMF board is set to conduct the third review of Ghana’s programme on December 2, 2024, a delay described by the IEA as “belated,” given that staff-level reviews were completed in early October.
Minister Highlights Improved Stability
At a recent briefing, Dr. Amin Adam noted that the Cedi’s depreciation has slowed compared to previous years. He reported a cumulative depreciation of 14.2% as of May 2024, compared to 20.7% during the same period in 2023.
He highlighted the progress made since 2022, when the Cedi depreciated by 54.2% by November, compared to 27.8% by December 2023. “On a comparative basis, we are safe to conclude that the Cedi is still strong, very strong,” he said.
However, recent pressures on the exchange rate underline ongoing challenges for the currency.
Source:TheDotNews