The Bank of Ghana (BoG) has injected close to US$100 million into the interbank forex market, causing the cedi to regain some of its lost value this week. Over the past seven days, the Central Bank has introduced approximately US$96.1 million into the market, leading to notable improvements in the cedi’s exchange rate.
As of Wednesday, the dollar traded between GH¢16.20 and GH¢16.30 cedis, compared to the previous week’s range of GH¢16.55 to GH¢16.65.
BoG’s daily interventions are aimed at meeting the increasing demand for dollars as traders stock up for the upcoming festive season. The Central Bank initially relied on 7-day forward sales but has now introduced 2-day sales, effectively flooding the market with US dollars. However, these interventions are carefully managed to avoid destabilizing the market. Speculations suggest that certain vested interests may resist a rapid strengthening of the cedi, as such a move could be equally disruptive.
In recent weeks, the cedi had faced significant depreciation due to surging demand for the US currency. Many market analysts had called on the BoG to release part of its accumulated reserves to halt the decline. Although the Central Bank delayed, its eventual intervention helped the cedi gain ground this week.
Ahead of this intervention, the Central Bank Governor had asserted that the BoG had sufficient reserves to push the exchange rate down to GH¢10 cedis per dollar. However, Dr. John Kwakye, Head of Research at the Institute of Economic Affairs, challenged this statement on X (formerly Twitter), arguing that the BoG was obligated under its IMF programme to build up dollar reserves rather than deplete them. He also suggested that even if the Central Bank intervened, the effect would be short-lived as market forces would eventually push the dollar rate back up.
Coinciding with the cedi gain, the BoG resumed publishing its forex rates after a six-month hiatus. This resumption follows a directive that had previously halted forex bureaux from advertising their rates online. Despite the Central Bank’s return to posting rates, the Ghana Association of Forex Bureaux (GAFORB) has yet to resume publishing its indicative rates.
A sustained drop in the dollar rate could help curb recent price hikes in goods and services. However, the anticipated rise in prices due to festive season demand may limit the overall impact.
With remittances expected to increase in the weeks leading up to Christmas, the cedi is likely to remain stable or even strengthen further. The key concern, however, is whether the current gains will continue into January—a period historically associated with rapid depreciation of the cedi.
