The Bank of Ghana has stated that it remains optimistic that positive sentiments from the third tranche of Ghana's IMF Extended Credit Facility (ECF) program, the breakthrough with external debt restructuring, and the Fed's expected rate cut will support the recovery of the cedi which has been experiencing persistent depreciation against major trading currencies.
According to the central bank's latest Monetary Policy Report for July 2024, the local currency has depreciated by 18.6 percent, 17.9 percent, and 16.0 percent against the dollar, the pound, and the euro, respectively, on a year-to-date basis.
This is compared to a depreciation of 22.0 percent, 26.3 percent, and 23.8 percent against the dollar, the pound, and the euro, respectively, during the same period in 2023.
However, on the retail market, the cedi is selling for GH¢16.28 to US$1 as of Wednesday, September 4, 2024.
“In the outlook, the tight monetary policy stance in Ghana and forward guidance on policy rate cuts in some advanced economies are expected to work through the expectations channel to help ease pressure on the cedi. Also, strong liquidity management and continued Forex auctions are expected to support the forex market,” the BoG report said.
Meanwhile, the central bank projects that fiscal spending amid upcoming elections remains an upside risk to the stability of the cedi.
See the full report below:
Credit: ghanaweb.com