Governor of the Bank of Ghana (BOG), Dr. Ernest Addison expressed optimism regarding the stability of the Ghana cedi against the US dollar in the near future.
He attributed this confidence to the robust reserves accumulated by the Bank of Ghana and the implementation of fresh monetary measures along with stringent enforcement of foreign exchange regulations.
Dr. Addison emphasised that the Bank of Ghana’s reserves had surpassed $6.0 billion, marking a significant improvement in the factors that previously exerted pressure on the cedi.
“This is based some strong reserves that the Bank of Ghana has built over the past months to support the cedi, some fresh monetary measures being implemented, and strict enforcement of the foreign exchange regulations.
“We are now reporting reserves of more than $6.0 billion, and therefore the underlying factors that caused those pressures in the past have improved greatly”, Dr. Addison disclosed.
He highlighted increased remittance inflows as well, which are expected to bolster the currency’s performance in the upcoming months.
“We believe that all these developments should give the market some assurance that the cedi’s outlook will remain favourable”.
Addressing concerns about recent challenges faced by the cedi, especially in the first quarter of 2024, Dr. Addison acknowledged a depreciation of about 6.8% against the US dollar.
“These were compounded by delays and uncertainties associated with the second tranche of the cocoa loan inflow and World Bank’s disbursement of budget support”, the Governor added.
However, he noted that measures taken by the central bank throughout 2023 and recent months were beginning to show positive responses.
Despite pressures stemming from the strength of the US dollar in global markets and payments to sectors like energy and corporate, Dr. Addison pointed out mitigating factors such as remittance inflows, mining company contributions, and the Domestic Gold Purchase Programme.
“Inflows from the World Bank, the tight monetary policy stance, and a weaker US dollar from potential policy rate cuts in the USA are expected to support the relative stability of the Ghana cedi”, he pointed out.
He also mentioned expectations of support from inflows, a tight monetary policy stance, and potential US policy rate cuts affecting the US dollar’s strength.
Dr. Addison discussed the revised cash reserve ratio and emphasized the central bank’s commitment to strict enforcement of foreign exchange regulations as measures to uphold the cedi’s performance in the upcoming weeks.