Fixing the Rise of Dollar to Cedi
Oil prices rose from $72 per barrel as at June 2021, to $118 in June 2022, representing a whopping increase of about 64%
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Ghana’s cedi has recorded some loss of value against major trading currencies like the US dollar, in recent weeks.
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The Bank of Ghana attributes this persistent worrying trend to among other factors, the significant impact of high crude oil prices on our import bill.
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As at end of June 2022, Ghana had imported crude oil to the tune of 2.3billion USD. At same time last year (June 2021), oil imports amounted to 1.2billion USD (nearly half). This data suggests that we have in the first six months of 2022 imported an amount nearly equal to our entire spend in the twelve months of 2021 on crude oil of 2.7billion USD.
Oil prices rose from $72 per barrel as at June 2021, to $118 in June 2022, representing a whopping increase of about 64%.
The bank of Ghana goes on to list other factors as;
▪︎The strengthening of the US dollar against other major currencies, including our cedi. The Euro and Pound have since the beginning of the year lost 10.1% and 10.8% of value respectively to the US$.
▪︎Non-rollover of maturing bonds by non-residents. This comes on the back of credit downgrades by global ratings companies.
▪︎Loss of external finance access due to downgrades.
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Below are the steps taken to mitigate the situation;
1.Bank of Ghana has launched a gold purchase programme to shore up its forex reserves. This programme allows the central bank rights to purchase gold from local mining companies with cedis.
2.The Bank will continue providing fx through the special auction platform to bulk distribution companies of oil.
3.Commercial Banks will also be provided with excess forex by central bank to support their market operations.
4.The $750million Afreximbank credit facility should be disbursed latest next week.
5.The Cocoa syndicated loan of about 1billion USD expected in the last quarter will also help in improving our reserve position.
6.The Afriexim loan will undertake various projects including road construction, railway construction, and other critical infrastructure projects.
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