Be calm; steps to remedy the cedi decrease are in motion, says the Bank of Ghana


Be calm; steps to remedy the cedi decrease are in motion, says the Bank of Ghana

The people has been advised by the Bank of Ghana (BoG) to maintain calm while it implements measures to slow the rate at which the cedi is losing value versus the major international currencies.

As part of the steps, the central bank announced that it will raise the short-term supply of foreign currency (FX) to banks in order to satisfy the rising FX needs for external payments.

It stated in a note to Graphic Online on Friday, August 12, that the rise in demand for hard currencies from non-resident investors exiting the jurisdiction was the reason for the higher supply of foreign exchange.

The country’s import costs for oil have skyrocketed as a result of the high price of crude, according to the central bank, prompting it to raise its supply of hard currencies to keep up with demand.

Outcry of Bank of Ghana

The note and promise from BoG come in response to public uproar about the recent sharp decline in the value of the cedi.

This year, the cedi depreciated significantly as a result of increased demand for foreign currency over supply at a time when the nation’s inability to access the international capital market for borrowing due to high debt levels and low investor confidence.

As of July, the cedi had lost 20% or more of its value. It currently trades for more than GH9.4 to one USD.

The Ghana Union of Traders Association (GUTA) demanded practical action last week to stop the decline, pointing out that firms were suffering as a result of the depreciation.

Similar worries were also voiced by the Association of Ghana Industries (AGI), who cited the effect on operating costs.


In response, BoG claimed that a number of factors, notably the strengthening of the US dollar, were driving the cedi to drop more quickly.

“As the US dollar has strengthened, so has the value of other currencies, including the cedi.

“Since the start of the year, the euro has also declined by 10.1 percent, while the pound sterling has fallen by 10.8% against the US dollar.

According to BoG, countries that are comparable to Ghana are all suffering rapid depreciation, with annual rates averaging 11.5%.

The list of additional issues included the reaction of investors to the economy’s downgrade are: non-resident investors’ failure to reinvest maturing bonds, high crude oil prices, and the loss of access to the external market for borrowing.

The Bank of Ghana’s whole statement is provided below.

Reasons for the currency’s depreciation thus far in 2022 and the measures

  • Firstly, the US dollar’s increased strength has caused other currencies, particularly the Ghana cedi, to decline in value. The pound sterling has lost 10.8% of its value versus the US dollar since the start of the year, and the Euro has lost 10.1 percent of its value. Similar nations to Ghana (Ghana’s peers) are all going through a steep devaluation, with an average of 11.5 percent year-to-date.
  • Secondly, investor response to Credit Rating Downgrade: Since January 2022, Ghana’s sovereign credit rating has been downgraded, which has prompted investor response and caused non-resident investors to prematurely exit our bond market. The Central Bank must give dollars for them to abandon the bond market when they decide to do so, which places a tremendous strain on reserves and weakens the cedi.
  • Bonds held by non-residents are not rolls over when they mature as a result of unfavorable investor reaction. These bonds are held in local currencies; but, if non-residents choose not to roll them over. The Central Bank will provide dollars to help externalize these money.
  • The substantial increase in crude oil prices and its effect on the oil bill: Over the course of the year, the price of crude oil has increased significantly on a global scale.
  • Finally, loss of External Financing: Ghana was unable to access the Eurobond market due to ratings agency downgrades. In order to assist finance the budget, Ghana has routinely raised US$3 billion from the Eurobond market over the past three years. The Central Bank’s capacity to give further support for the currency is hampers. This year, which means that there hasn’t been a new fresh influx of cash. According to statistics from interventions. BOG has had less market presence so far this year than it did in 2021.

What the Bank of Ghana is doing about the issue

  • First of all, program for buying gold to build up foreign exchange reserves.
  • A special foreign exchange auction for Bulk Distribution Companies (BDCs) to assist in importing petroleum goods
  • Finally, the recently granted USD 750,000,000 Afriexim loan facility by Parliament. Will improve the nation’s foreign exchange situation and aid in regaining confidence.


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