Governor of the Bank of Ghana, Dr. Ernest Addison has highlighted the difficulty in dealing with the cedi’s depreciation, which is now being driven by sentiments and election-related concerns.

The Governor noted that even though the Bank of Ghana has taken the required measures over the past months to address the recent challenges facing the Ghana cedi, issues about sentiments have become more difficult to manage.

He added that "we also know that this is an election year and therefore there are issues about the outlook, uncertainty and speculations which have become more important in determining the behaviour of market players."

Dr Addison was responding to a question posed by JoyBusiness on what is driving the current depreciation of the Cedi and what can be done now to firmly stabilize the depreciation.

The Governor noted that “we find ourselves in a very difficult situation in dealing with the recent pressures on the Ghana cedi.”

“What else can you do about expectations, what else can you do about uncertainty, about the economy, giving about the fact that we have an election coming up."

He added that "not everything can be easily handled, some of them are very complicated."

Cedi’s Performance

The Bank of Ghana reports that the cedi's rate of depreciation against the dollar from January to July 2024 is around 19.1 percent. The Bank of Ghana is quoting 14 cedis 78 pesewas to the dollar.

However, on the open market, some of the major commercial banks on Monday, July 29, 2024, are quoting 15 cedis 60 pesewas to the dollar.

The local currency has struggled to stabilize against the dollar since the beginning of this year. There were reports that if the country is able to pass the second IMF program review and reach an agreement with its external creditors, it could go a long way to halt the local currency’s free fall. However, that is yet to happen.

Speaking at a separate event in Accra, the Bank of Ghana Governor, Dr. Ernest Addison, revealed that the local currency has started responding to recent market developments, adding that “the Bank of Ghana expects relative stability of the Ghana cedi going forward."

“We should remember that last year the cedi was relatively stable and we did not have this challenge in 2023,” the Governor added.

Meeting External Obligations and Eurobond Payments

Governor of the Bank of Ghana also revealed that the Central Bank has been able to build the required foreign exchange reserves to meet Ghana’s external obligations.

Ghana is expected to start servicing its Eurobond debts later this year as soon as the government signs an agreement with the bondholders on restructuring 13.1 billion cedis in debts.

There are fears that the country could struggle to pay the approximately 500 million dollars.

However, responding to a question posed by JOYBUSINESS at the Monetary Policy Committee meeting press conference, the Governor noted that they have built the required reserves to deal with these payments expected later this year.

“We were very much aware of these payments and we have indeed built up reserves to meet these obligations” The Bank of Ghana Governor assured.

The Governor revealed that these payments were all part of the IMF programme in terms of building the required reserves to meet these payments.