The Ghana cedi appreciated on Monday morning, marking the first trading day following the International Monetary Fund (IMF) Board’s approval of Ghana’s second review and the immediate release of the third tranche of $360 million.
As of 11 am, the inflow had not yet reached the Bank of Ghana’s account, but currency dealers on the interbank market have tempered their demand for the dollar, anticipating a potential rate drop in the coming days.
At the market opening on Monday, the dollar traded lower at GH¢15.30 and GH¢15.45, compared to GH¢15.40 and GH¢15.55 on Friday, June 28.
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Kodzo Dziwornu Letsa, a Currency and fixed-income trader, explained that the fall in the sale of dollars dipped due to inadequate firm bids in anticipation of IMF’s approval.
“The selling price of the dollar decreased mainly due to a lack of firm bids, as many bank dealers anticipate a marginal drop today following news of Ghana’s IMF approval for the $360 million disbursement, which is expected to support foreign exchange reserves,” he said.
However, analysts caution that Cedi’s gains may be temporary, given that the inflow is not substantial enough to completely counterbalance the ongoing high demand for the US dollar.
A statement released after the Executive Board meeting last Friday highlighted Ghana’s economic reforms, supported by the IMF, which have yielded positive results. These reforms have contributed to economic stability, reduced inflation, and improved government finances following significant challenges in 2022.
The IMF statement also advised the Central Bank to maintain flexibility with the local currency.
“Going forward, maintaining an appropriately tight monetary stance, and enhancing exchange rate flexibility are of the essence, along with timely implementation of Fund’s advice on safeguards”, the statement emphasised.
Market observers interpret this guidance as indicating that the IMF is cautious about a rapid reversal of cedi depreciation, reflecting a belief among experts that the cedi’s true value may exceed GH¢16 to the dollar.
