The Ghana cedi continues to face challenges against major currencies, registering a 3.88% decline against the US dollar over the past week.
This latest drop brings the Cedi’s year-to-date depreciation to 21.20%. Reports attribute the cedi’s weakening to a stronger US dollar and increased local demand for foreign exchange.
Starting the week of June 18, 2024, the cedi remained stable, trading at GH¢15.70 to $1 at major forex bureaus.
In efforts to bolster the US dollar, the US Federal Reserve surprised markets by signalling only one policy rate cut this year, diverging from expectations of two cuts. This move boosted the US dollar index by approximately 100 basis points week-on-week, contributing to the Cedi’s depreciation against the dollar and other major currencies.
During the same period, the cedi also saw a decline of 2.43% against the British Pound and 2.87% against the Euro.
Despite these challenges, there is optimism that the Ghanaian government’s agreement with official creditors on debt restructuring terms will strengthen the cedi. This agreement paves the way for Ghana to receive the next tranche of the IMF bailout, amounting to $360 million.
Analysts predict that this development will enhance foreign exchange reserves, improve FX liquidity, and aid in stabilising the cedi in the short term.