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Dollar Hits 16 Cedis on Retail Market 2 Weeks After Crossing ¢15

The Ghana Cedi hits ¢16 to the Dollar.

The dollar is now selling at ¢16 in some forex bureaux, up from ¢15.90 just two days ago and ¢15 a fortnight ago. This increase persists despite recent measures and reassurances from Central Bank Governor Dr. Ernest Addison and Finance Minister Dr. Mohammed Amin Adam over the past week.

While the depreciation of the cedi is most pronounced in the retail market (forex bureaux), the interbank market is also feeling the impact. For the first time, the dollar exceeded ¢15 on the interbank market.

Trading opened between ¢14.93 and ¢14.99, but firms offering around ¢15.20 emerged before noon on Thursday, May 30, driven mainly by increased corporate demand for the US currency.

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The cedi has depreciated by over 20% in the retail market, a place many people turn to when banks cannot meet their dollar needs. The dollar started 2024 at around ¢12.20, climbed to ¢14 by the end of April, and reached ¢15 by mid-May. It is now selling at GH¢16 in forex bureaux.

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In the interbank market, the dollar began the year at approximately ¢11.88, rose to ¢13.65 in early April, and reached ¢14.70 by mid-May, before surpassing GH¢15 today, May 30.

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Despite the Finance Minister’s announcement on May 24 of an expected inflow of $2.3 billion from various sources by year-end, coupled with government efforts to control expenditure and intensify the Gold-for-Oil programme, the cedi continues to depreciate.

This was reiterated by the Central Bank Governor in a press conference on May 27, where he assured that “The Bank of Ghana has adequate reserves to manage these shocks to the foreign exchange market.”

The primary cause of the Cedi’s depreciation is the low supply of dollars against increased demand from corporate institutions and importers. The Central Bank also attributes the continuous rise in the dollar’s price to speculator activities.

The rapid depreciation of the cedi has severe consequences for many. Students pursuing foreign professional courses struggle to raise additional funds to pay in dollars.

Mortgage holders face rising monthly payments, eroding their take-home pay. Importers need more money to buy goods, and the duties they pay also increase, as they are tied to the dollar. Key commodities such as petroleum products and some utility services have seen price hikes due to the Cedi’s depreciation.

With the government barely meeting its minimum Gross International Reserve, covering three months of imports, the Central Bank has limited capacity to release dollars to the interbank market.

The next significant inflow expected is $360 million from the International Monetary Fund (IMF) after the Board’s review of Ghana’s second programme in June. However, analysts warn that this amount alone may not be sufficient to meet the rising demand for dollars, as a recent close to $100 million intervention by the Bank of Ghana failed to halt the cedi’s depreciation.

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