The Bank of Ghana (BoG) has not injected any dollars into the forex market since last week Thursday, but the Ghanaian cedi has largely maintained its stability. Despite the absence of daily forex injections, the cedi continues to trade around GH¢14.74/ GH¢14.79, a level it has held since mid-December after recovering from a steep depreciation in October and early November.
From November 9, the cedi gained significantly against the dollar, dropping from a high of GH¢16.50/ GH¢16.65 to GH¢14.67/ GH¢14.74. This was driven by the BoG’s consistent dollar sales, which helped bolster the local currency. However, since the latter part of last week, the central bank has halted its injections, leaving the cedi to float on market forces.
Analysts suggest that the current stability of the cedi could be attributed to reduced trading activity during the holiday season, with a clearer picture of the currency’s strength expected in the new year when markets become more active. The period of relative stability has eased inflationary pressures, slowing the rate at which prices of goods and services are increasing, offering some relief to consumers.
However, economist Dr. John Kwakye of the Institute of Economic Affairs has raised concerns over the BoG’s strategy of selling dollars to stabilize the exchange rate. He cautioned that this could deplete the country’s foreign reserves. In a social media post, Dr. Kwakye stated, “As Bank of Ghana doubles its efforts to keep the exchange rate below 15, it must be conscious of its reserves.” He also emphasized that the central bank should be held accountable for its performance in managing inflation and the exchange rate.
As the country approaches 2025, the cedi’s future trajectory will depend on how the Bank of Ghana manages its reserves and whether market forces can sustain the recent stability without central bank intervention.
