The Bank of Ghana (BoG) has given the firm assurance that it will use all the tools at its disposal to guard against the undue volatility of the Cedi.
This comes at a time that the local currency has come under what can be described as sustained pressure over the past three weeks.
The Central Bank noted that they are aware of these developments on the interbank market, resulting in it stepping up its intervention.
Central Bank added, “we are also monitoring happenings in the global market and will take the necessary actions needed.”
What is causing cedi’s depreciation?
The Cedi has come under some pressure over the month.
This has been sustained over the past two weeks, first in the last week of June 2021 and the first week of July 2021.
Market analysts are attributing it to the surge in corporate demand by businesses that are trying to pay dividends to shareholders outside the country.
The demand for dollars has also picked up due to some businesses looking for dollars to finance imports, as governments around the world ease Covid-19 restrictions as a result of the deployment of vaccines and being in a better position to manage the spread of the pandemic.
The cedi which was trading at around 5 cedis 80 pesewas a week, is now selling at 5 cedis 91 pesewas against the US dollar.
The local currency or currencies around the world, after hit by depreciation. But this is being reported because of the blips that have been sustained over the past two weeks.
Bank of Ghana and the cedi’s outlook
The Bank of Ghana has however noted that despite the current challenge, it is optimistic about a stable outlook for the local currency in the coming months.
According to the head of financial markets, Stephen Opata the Bank of Ghana is also in a strong position in terms of reserves, which has hit a little over $11 billion earlier this year.
He also talked about some inflows from the donor partners as well as Foreign Direct Investment that should help improve its reserves going forward to give some comfort to investors.
The Bank also talks about, its dollar auction program which should give some comfort to investors in the coming months, to deal with the demand for dollars.
However, some analysts have argued that there will be some level of depreciation however it will be better than what Ghana experienced for the past year.
Impact of current situation on the economy
According to some analysts that JOYBUSINESS has engaged the immediate of this development could be “possible” increase in the cost of prices of petroleum products in the coming months.
It could in the coming months increase the cost of production for businesses and even the cost of living as well. This is because the depreciation of the cedi has been sustained over the past two weeks.