The cedi experienced significant depreciation over the weekend, with exchange rates against the US dollar reaching between GH¢16.9 and GH¢17. Some forex bureaux were selling the dollar as high as GH¢17, while online transactions were using rates between GH¢16.8 and GH¢16.9.
This marks a continuation of the cedi’s decline, which saw it reach GH¢16 a week ago and then rise to GH¢16.40 by midweek, driven by a dollar shortage in the market. The rapid depreciation has raised concerns, as the cedi had enjoyed relative stability since the beginning of August, even making marginal gains mid-month.
The renewed depreciation coincided with the announcement that Ghana Cocoa Board (COCOBOD) would no longer pursue its cocoa syndicated loans. Some analysts believe this announcement may have signaled a potential shortage of dollars, leading to increased demand for the US currency and further weakening the cedi. The interbank market has also seen a surge in demand for the dollar, outstripping supply.
Given the rapid depreciation over the past week, a Central Bank intervention may be necessary to stabilize the market and prevent further decline in the local currency. A depreciated cedi could lead to higher costs for goods and services, further driving up inflation. After years of economic challenges, any reversal of the recent recovery could intensify public dissatisfaction.
