Middle East Conflict May Renew Pressure on the Cedi – Report
Ghana’s currency could come under renewed pressure if escalating tensions in the Middle East push global oil prices higher, according to a new economic outlook by research and advisory firm Laurus Africa.
The firm warns that rising crude oil prices would increase Ghana’s import bill, potentially driving up the country’s demand for foreign exchange and weakening the local currency.
Analysts at Laurus Africa note that Ghana, which relies heavily on imported crude oil and refined petroleum products, is particularly vulnerable to external price shocks. A sustained surge in global oil prices could therefore heighten pressure on the Ghana cedi while also fuelling domestic inflation.
The report states that geopolitical disruptions in global energy markets have historically had significant implications for Ghana’s macroeconomic stability.
It cites the example of the Russian invasion of Ukraine, which triggered widespread supply chain disruptions and pushed up commodity prices globally. For Ghana, the resulting increase in import costs widened the country’s foreign exchange requirements.
During that period, the Ghana cedi depreciated by 7.2 per cent in March 2022 alone — far exceeding the 10-year average monthly depreciation of about 1.27 per cent for the same period.
According to the analysts, similar geopolitical shocks could once again amplify currency volatility if global energy prices spike.
They caution that a prolonged escalation of conflict in the Middle East could therefore place additional strain on Ghana’s foreign exchange market and complicate efforts to maintain macroeconomic stability.
