As 2024 draws to a close, attention is squarely on the performance of Ghana’s cedi, which showed stability in the final weeks of the year. Despite the consistent gains the currency recorded since November 9, the cedi maintained a steady range on the interbank market during the week of December 16 to December 20, closing at GH¢14.73/GH¢14.78 against the dollar. This was a drop from the GH¢ 14.67/GH¢14.74 levels seen on December 13, following a period of notable improvement after the currency’s performance had previously languished around GH¢16.55/GH¢16.65 just a month and a half ago.
The Bank of Ghana’s daily dollar interventions, including both 2- and 7-day forward sales, were central to stabilizing the cedi in recent weeks, with over $1 billion sold into the market, supported by stronger reserves and additional inflows from the International Monetary Fund. Despite these efforts, the market’s stability raised questions about whether the cedi’s performance would persist into the new week, or if movement would occur in either direction.
Economists have warned that the current pace of dollar interventions might not be sustainable, with concerns over the depletion of the country’s foreign exchange reserves, especially as demand for the dollar typically surges in the first quarter of 2025. This seasonal rise in demand is driven by corporate needs to repatriate profits and traders’ payments for goods procured ahead of the festive season.
Dr. John Kwakye, Head of Research at the Institute of Economic Affairs, has been a vocal critic of the Central Bank’s management of its policy rate. In a recent social media post, he emphasized the need for urgent action to reduce the high cost of living, particularly by addressing the core drivers—food, energy, and the exchange rate. He suggested that the Bank of Ghana’s focus on managing demand is counterproductive and fails to address these critical factors.
As the cedi’s future direction remains uncertain, both market analysts and currency traders are watching closely to see how it will fare in the coming weeks. With the economy’s fragility and looming pressures on reserves, the coming months could present both challenges and opportunities for the local currency.
