Restoring confidence in the cedi

 

Adnan Adams Mohammed

The local currency, Ghana Cedi, has for some continuous years suffered rapid depreciation against major international trading currencies.

These have affected stability of goods and services in the country, contributing to high inflation and cost of living and doing business in the country over the years.

It has brought about citizens and businesses calling for measures to strengthen the Cedi, especially, during festive periods and beginning of the every year.

The good news is that, the Bank of Ghana has so far has received US$1billion of the cocoa syndicated loan signed a couple of months ago.

The US$1 billion is expected to provide balance of payment support, improve the country’s Gross International Reserves, and also provide some support for the fiat currency, the Ghana cedi.

The Gross International Reserves (GIR) increased by US$1.67 billion to US$8.70 billion as at November, providing cover for 4.2 months of imports. This compares with the end December 2018 position of US$7.02 billion equivalent to 3.6 months of import cover.

The Ghana cedi has depreciated by 10.4 percent against the US dollar as at November compared with an 8.1 percent depreciation for the corresponding period in 2018. Against the British pound and euro, the Ghana cedi cumulatively depreciated by 11.2 percent and 7.4 percent respectively, compared with 2.6 percent and 2.8 percent over the corresponding period in 2018.

In trade-weighted terms, the real effective exchange rate continued to be broadly aligned with the underlying fundamentals.

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Although, the Cedi achieved slight stability over five months this year, much is still needed to be done to improve its stability.