Ghana’s local currency continues to fall in value against major world trading currencies, particularly the United States dollar.
Currently, the dollar, which is seeing a consistent rise in its value in countries such as the United Kingdom, China, and South Korea, is trading at GH¢11 in some forex bureaus in Accra.
According to Afriswap Bureau De Change, a forex bureau in Accra, the Ghana Cedi’s performance against the Pound and Euro is worsening as it goes for GH¢12.5 and GH¢10.57 respectively.
On Friday, October 7, 2022, the Bank of Ghana quoted the dollar at GH¢9.64 (selling) on the interbank market. The Pound and Euro went for GH¢10.70 and GH¢9.42.
This comes in the wake of a report by the Bank of Ghana that the local currency has depreciated by 37.5% against the United States Dollar since the beginning of 2022. “In the year to September 2022, the Ghana Cedi has depreciated by 37.5 percent, 24.1 percent, and 27.5 percent against the US dollar, the pound, and Euro, respectively,” the central bank disclosed in its October 2022 Monetary Policy Report.
However, Bloomberg reports that the value of the Ghana Cedi has plummeted by a devastating 40.05% to the US dollar in the first nine months of 2022.
Many major currencies this year slipped in value against the dollar following the Federal Reserve’s decision to raise interest rates to fight inflation.
The U.S. central bank raised rates by 0.75 percentage points to curtail an 8.5% inflation rate.
The Ghanaian government has also taken some action to combat he depreciation of the cedi.
A $1.13 billion cocoa syndicated loan has been secured, which will help improve supply of the dollar. In an effort to strengthen the cedi without raising inflation, the Bank of Ghana has also started a bulk purchase programme to buy gold locally and increase the gold component of its reserves.
The central bank is also going after entities charging dollars or any other foreign currency for the services they render without permission.
Meanwhile, in combating inflation in Ghana, the Bank of Ghana’s Monetary Policy Committee has increased the Policy Rate by 250 basis point to 24.5%, the highest since 2017.
“Inflation remains elevated and the balance of risks is on the upside. Although the forecasts are for monthly inflation to continue to slow down, the risks are on the upside, emanating largely from pass-through effects of the currency depreciation, the recent upward adjustment in utility tariffs, and rising inflation expectations,” Governor of BoG, Dr Ernest Addison explained as reason for the upward adjustment. As of August 2022, Ghana’s inflation stood at 33.9%. This is the fourth time the monetary policy rate has been reviewed this year.
In March, the rate was increased from 14.5 per cent in January to 17 per cent. In May, the policy rate was elevated to 19 per cent and later by 3 per cent in August to 22 per cent.
The Central Bank increased the policy rate by 2.5% on March 25, 2022, to 17%, and subsequently increased it on May 23, 2022, to 19%. It again adjusted it upwards by 300 basis points to 22% in August 2022.
Source: The Independent Ghana