By Adnan Adams Mohammed
Ghana’s fiat currency is likely to remain stable at the back of the implementation of the International Monetary Fund, (IMF) program.
The Bank of Ghana is expecting the second tranche of the IMF Extended Credit Facility by November, in addition to the cocoa loan syndication as well as the World Bank support for the Ghana Financial Stability Fund.
All these monies will support the stability of the local currency and also meet the dollar demands of importers for the festive season.
Also, the positive sentiments from the full implementation of the IMF programme may continue to shore up the currency.
The Ghana cedi has been relatively stable since February 2023, after depreciating sharply in January.
The gains made by the cedi was on the back of positive sentiments over the IMF programme; disbursement of the first tranche of the ECF, which amounted to US$600 million; weakened demand pressures; weakness in the US dollar; forex purchases from the mining and oil sectors; and forex liquidity support through the BDCs FX auction.
The Ghana cedi cumulatively depreciated by 22.0 percent, 26.3 percent and 23.8 percent against the US dollar, the pound sterling and the euro, respectively, in June 2023. This was against a cumulative depreciation of 16.9 percent, 7.7 percent and 9.9 percent against the US dollar, the pound sterling and the euro, respectively, during the same period in 2022.
The Ghana cedi has generally remained stable since January 2023, with a cumulative depreciation of 1.8 percent between February and June 2023
The Ghana cedi has depreciated by 30.7 percent in nominal trade weighted terms and 28.6 percent on forex transaction weighted terms on a year-to-date basis. This was against a depreciation of 12.0 percent and 19.4 percent in nominal trade weighted terms and nominal foreign exchange transaction weighted terms, respectively, over the same period in 2022.
The cedi depreciated by 18.4 percent and 16.6 percent in real trade weighted terms and real forex transaction weighted terms, respectively, on a year-to-date basis. This compared with an appreciation of 3.2 percent in real trade weighted terms and a depreciation of 3.0 percent in real forex transaction weighted terms for the same period in 2022.
