Cedi depreciation slows amid improved FX liquidity

The cedi has experienced a slowdown in depreciation pressures due to improved foreign exchange (FX) liquidity, particularly in US dollars.

According Joy Business, this improvement follows significant interventions by the Bank of Ghana last week, which included providing about $59 million on the spot market and auctioning $20 million to the Bulk Oil Distribution Companies.

These interventions by the

Read full articleCentral Bank represent the most substantial support provided within a week since the start of 2024. This influx of FX liquidity helped sustain the cedi for most of last week. However, the local currency saw a decline on Friday, May 17, 2024, as corporate demand resurged.

As a result, the cedi depreciated by 0.84% week-on-week against the US dollar and 1.22% against the British pound. Conversely, it gained 2.80% week-on-week against the euro. The year-to-date loss of the cedi stands at 18.70%, with the exchange rate at GH¢15.20 to the dollar on the retail market.

Additionally, on Friday, May 17, 2024, the Parliament of Ghana approved a $150 million loan from the World Bank’s International Development Association (IDA) to finance the Greater Accra Resilient and Integration Development project. Although the expected date of inflow is not specified, analysts believe that access to these funds will support FX liquidity and provide further backing to the cedi.

Despite these measures, the cedi is expected to weaken slightly this week due to strong demand for the dollar.