Some forex bureaux in Accra have increased the selling rate of the US dollar to GH¢16.78, driven by surging demand, leading to further depreciation of the Ghanaian cedi. Previously, the dollar was sold at GH¢16.50 at some key bureaux but by the end of Monday, October 14, it reached GH¢16.78, raising concerns about worsening cedi depreciation and potential price hikes during the holiday season.
This trend aligns with movements in the interbank market, where the dollar traded between GH¢16.03 and GH¢16.10 on Monday, surpassing the GH¢16 mark. As a result, the price of goods, including petroleum products, is expected to rise. The LPG Marketers Association has already warned of a potential 6% increase in LPG prices starting tomorrow due to both global petroleum price hikes and the cedi’s depreciation.
If not addressed, the cedi’s continued decline could lead to higher prices for imported items and an increase in inflation, undermining economic gains achieved earlier in the year. Analysts are calling on the Bank of Ghana to intervene by releasing more US dollars into the market to stabilize the cedi.
The country’s Gross International Reserve improved from 2.9 months of import cover in May to 3.4 months in August, giving the Bank of Ghana room to inject dollars into the system. In addition to imports for the festive season, there is suspicion that some individuals may be buying US dollars as a store of value, anticipating further cedi depreciation, which has been a recurring issue in the first quarter of the year.
Meanwhile the Ghana cedi and three other currencies have been ranked among the worst-performing in Sub-Saharan Africa (SSA) in 2024, according to the World Bank’s October 2024 Africa Pulse Report.
The report revealed that the cedi has depreciated by approximately 24% against the US dollar, placing it as the fourth weakest currency in the region. Leading the list of the worst performers are South Sudan’s pound, which has lost over 60% of its value, followed by Ethiopia’s birr (51%) and Nigeria’s naira (over 40%).
In contrast, the Kenyan shilling has emerged as the best-performing currency in Sub Saharan Africa, appreciating by 21% year-to-date as of August 2024.
Source:thehighstreetjournal.com