It is emerging that demand for the U.S. dollar, after cooling for weeks, is gathering momentum, picking up marginally on Tuesday.
This is the first time in many weeks that elevated demand for the U.S. dollar is testing the resilience of the local currency.
But the good news is the cedi maintained stability against the greenback.
Fixed income and currency trader, Kojo Letsa, tells The High Street Journal that, thanks to timely liquidity interventions by the Bank of Ghana (BoG), the cedi didn’t budge.
The market player reveals that the interbank forex market opened Tuesday’s session with a bid-offer spread of GHS 10.25/10.35, unchanged from the beginning of the week.
This, he says, is an indication that, while pressure is mounting, regulatory measures are containing volatility.
He further anticipates that judging from the robustness of the Central Bank’s intervention, the price range could be maintained till the close of trading today.
“The interbank foreign exchange market opened today’s trading session at a bid-offer spread of 10.25/10.35, unchanged from the beginning of the week. Price stability appears to have been maintained within this range, and I anticipate the pair will close at these levels today,” he indicated.
He continued, “While demand for the US dollar has increased, the regulator’s liquidity interventions appear to be effectively mitigating upward pressure.”
Market watchers note that a mix of external payment obligations, import-related demand, and foreign investor repositioning has all contributed to heightened dollar demand in recent days.
In typical conditions, such a surge would exert upward pressure on the cedi, potentially causing depreciation. However, BoG’s decisive market actions, including timely forex releases and open market operations, seem to be keeping the exchange rate anchored within a narrow and manageable band.
The central bank has long faced criticism over its forex management strategy, especially during periods of sharp volatility. However, the current trend suggests that its recent interventions are yielding desired results, even amid increased external sector pressures.
Analysts say this development is significant as it comes at a time when the Bank’s own financial position remains fragile, with experts warning that its ability to sustain such interventions could be tested if structural recapitalisation is delayed.
The swift response of the BoG to rising dollar demand this week could offer a temporary vote of confidence in its management of the cedi, and more broadly, in its commitment to price and monetary stability.
