The Bank of Ghana is optimistic that Ghana’s fiat currency, the cedi is expected to remain stable this year.
This follows projections from the Economic and Finance Think Tank, Center for Economics Finance and Inequality Studies (CEFIS) that the cedi will end the year at GH¢6.45.
According to the Central Bank, it has already put a lot of measures in place that will help stabilize the Ghanaian local currency in 2021.
The regulator maintains that together with its strong reserve position, forward sale of dollars and other “market monetary” measures will put the local currency on a strong footing for this year.
The BoG plans to sell or auction an amount of US$775 million on the forex market from January to December, this year, which would support the cedi.
From January to March, the bank would make available US$300 million for auctioning on the forex market, while US$475 million would be made available for auctioning from April to December, 2021.
This is to ensure that the availability of forex on the market through the respective banks for importers.
The Ghana cedi ended last year with a depreciation rate of 3.93% to the US dollar, making it one of the best performing currencies in Sub Saharan Africa.
The impressive performance also makes it the best since 2017 when it depreciated by only 4.88%.
At the forex bureau, the rate of depreciation was even lower at 2.2%.
The local currency actually appreciated in the final two-weeks of December 2020 at the forex bureau, from a depreciation rate of 3.1%.
The cedi has benefited from a myriad of factors including the Bank of Ghana’s Forex Forward Auction and the diversified exports.
This sets a favourable entry into 2021. The expectations are for the GHS [cedi] to remain well supported in first quarter of 2021 by the improved regulatory oversight, enhanced foreign exchange forward allotments and continued improvements in risk appetite of non-resident investors.
Many analysts had earlier forecast that the cedi will end the year with a less than 5% depreciation to the dollar in 2020.
A stable local currency going forward into the year will help businesses to plan well vis-a-vis their budgeting.
The Bank of Ghana last week announced the Auction Calendar for Forward Foreign Exchange Auctions to be held in 2021.
This is in accordance with the Foreign Exchange Forward Auction Guidelines issued on 23rd September 2019. The Competitive Multiple-priced Foreign Exchange Forward Auctions will be governed by the Regulations published and available on the Bank of Ghana website.