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Reasons for Cedi Depreciation and measures being pursued to stem the tide.

26, 5, 2024



The Cedi has relatively stabilised against major trading currencies since the beginning of the year. However, recent times have seen some pressures on the Cedi. Year-to-date depreciation of the cedi against the USD was 14.2% as at 20th May 2024, compared to 27.8% recorded in the same period in 2023. 

The exchange rate has witnessed some pressures in the last few weeks due mainly to a number of factors including:

• The strengthening of the US Dollar against major trading currencies;

• High Cedi liquidity and correspondently high FX demand  in the system partly emanating from the Ghs5.8bn coupon payment in February 2024 and payment to contractors  and to IPPs

• Relatively higher demand for FX from the corporate institutions;

• Restrictions on BoG intervention budget as well as statutory requirements to build ample net international reserves under the IMF ECF programme;

• Speculative activities as purchase of dollars as an asset holding has been on the rise partly due to uncertainties surrounding 2024 as an election year. 

The following measures are pursued to stem the tide of depreciation:

1. fast tracking the fiscal consolidation process through rationalizing spending and enhancing revenue mobilization;

2. ⁠intensification of the gold-for-oil programme, and appropriate FX interventions by BOG; 

3. ⁠Intensification of the gold-for-reserve programme; 

4. ⁠The disbursement of other ongoing projects including the $150 million World Bank Loan following the parliamentary approval last week Friday;

5. ⁠The expected disbursement of $ 300 million under the World Bank Development Policy Operation 2 possibly in the 3rd quarter of 2024;

6. ⁠Disbursement of US $ 200m to Ghana EXIM Bank and the GCB later in the year;

7. ⁠The expected 2024/25 Cocoa Syndicated proceeds in the 4th quarter of 2024 will all support the strengthening of the Cedi as they boost supply of forex markets;

8. ⁠We therefore expect total disbursements of at least US $ 2.32 billion before the end of the year to add to the significant foreign exchange supply. Hence there’s no need to rush and buy forex. 

Don’t read only headlines. And don’t be deceived by the propagandists. You have just read a  synopsis ☝🏾from the Finance Minister’s Monthly Economic Update on the specific matter of the cedi depreciation in recent times.

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