The Bank of Ghana (BoG) has attributed the recent gains in the cedi to a new set of monetary measures that it has implemented.
According to Stephen Opata, Director of Financial Markets at the Bank of Ghana, the cedi’s performance can be attributed to the BoG’s decision to limit foreign exchange support to certain essential commodities such as petroleum and medical and pharmaceutical products.
He went on to say that the cedi’s gains can also be attributed to prudent liquidity management in the financial system.
“We have also seen that Monetary Policy has been tightened, coming on the back of recent increases in the policy rate to 27 percent. This has also contributed to the cedi’s good run”, he added.
Despite current concerns with the proposed debt exchange program, he stated that “the continuous hike in the policy rate will also ensure that excess cedi cannot be used to purchase government bonds and other securities.”
According to Mr. Opata, these might be some of the main causes for the cedi’s stability against the dollar over the past three weeks.
When traded on the forex market, the cedi has made some steady gains against the US dollar.
Based on the average quotes published by some of the country’s commercial banks, the local currency has decreased from 15 to about 10 a dollar since November 2022.
Meanwhile, some financial analysts have connected the government’s staff agreed with the IMF to the cedi’s quick turnaround.
In a previous weekly report, Databank Financial Service made the forecast that the cedi’s recent upward trend would continue.
Some analysts have noted that the US Federal Reserve’s signals to start easing up on rate increases have also contributed to the stability of the cedi.
