Ghana’s cedi weakens to record low on dollar demand for imports
TLDR
- Ghana's cedi hits historic low due to increased dollar demand for essential imports like fuel and pharmaceuticals.
- Currency depreciates by 0.2% to 14.9335 per dollar in Accra, lowest level since at least 1994.
- Cedi weakens by 20% against US dollar in 202X, ranking as fourth-worst-performing currency by Bloomberg among 150 currencies globally.
Ghana's cedi reached a historic low on Monday as companies increased their demand for dollars to import essential goods like fuel and pharmaceuticals.
The currency, used in the world's second-biggest cocoa producer, depreciated by 0.2% to 14.9335 per dollar in Accra, marking its lowest level since at least 1994 when Bloomberg started compiling data.
Since the beginning of the year, the cedi has weakened by 20% against the US dollar, making it the fourth-worst-performing currency among about 150 currencies tracked by Bloomberg worldwide. It trails behind the Egyptian Pound, Nigerian Naira, and the Lebanese Pound by depreciation against the dollar.
Key Takeaways
In April, Ghana's gross international reserves surged to $6.6 billion, marking the highest level in over 19 months. Under Governor Ernest Addison's guidance, the central bank has been actively managing these reserves to ensure adequate supply in the market. This strategy includes direct intervention to meet the foreign exchange needs of certain companies, thereby alleviating the demand for dollars from commercial banks. The reserve increase follows Ghana's decision to halt most external debt payments since December 2022, as part of a debt restructuring initiative aimed at qualifying for an International Monetary Fund program. The $3 billion package and inflows from other multilateral and bilateral sources have contributed to this reserve buildup. However, a significant decline in cocoa export revenue, attributed to a decrease in chocolate ingredient output, has put pressure on the foreign exchange supply in the country.
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