Ghana Cedi gains for second consecutive week amid boost in liquidity
The Ghana cedi extended its recovery streak for the second week, buoyed by strategic interventions from the Bank of Ghana (BoG). The central bank injected $199.8 million into the forex market, supplemented by $21.55 million in foreign exchange inflows from market participants.
As a result, the cedi appreciated by 1.42% week-on-week against the US dollar, 3.03% against the British pound, and 3.36% against the euro. It closed last week trading at a mid-rate of GH¢16.79 to the dollar, compared to GH¢16.70 at the start of the week. Despite recent gains, the cedi has depreciated by 27% against the US dollar since the start of 2024.
IMF support on the horizon
The International Monetary Fund (IMF) has signaled a forthcoming disbursement of $360 million to Ghana under the Extended Credit Facility, pending Board approval of the third review in early December 2024.
The potential release follows Ghana’s progress in meeting key programme benchmarks, including the successful completion of a debt restructuring exercise earlier this year.
Market sentiment and outlook
Analysts predict that the IMF disbursement will boost Ghana’s foreign exchange reserves and reinforce supply-side measures, further easing pressure on the cedi.
“This development is expected to improve market sentiment and contribute to the cedi’s sustained recovery in the coming weeks,” a market analyst noted.
Cedi performance
The cedi’s recent depreciation is attributed to heightened demand for forex, external debt obligations, and global economic pressures. The BoG’s interventions, combined with improved inflows and external support, are seen as pivotal in stabilizing the currency. The ongoing recovery reflects a broader effort to restore confidence in Ghana’s currency and financial markets as the country works to stabilize its economy under the IMF-backed programme.
