BoG Reports a 25.8% Depreciation of the Cedi Since January 2023

In November 2023, the Ghana cedi experienced a significant depreciation, losing about 25.8% of its value against the US dollar, as reported by the Bank of Ghana in its November 2023 Summary of Economic and Financial Data.

This decline marked a departure from the relative stability observed between March and September of the same year.

The initial months of 2023 saw the cedi depreciating at a rate of 22.1%, a figure that slightly increased to 22.9% by September.

However, the real challenge emerged in October and November 2023, with the rate of depreciation spiking to 25.4% and 25.8%, respectively. As a result, the cedi is currently trading at approximately 12.15 in the forex market.

Against the pound and the euro, the cedi suffered even greater losses, dropping by 28.6% and 27.7%, respectively. This heightened depreciation was attributed to intensified demand for the dollar by corporates and importers in anticipation of the festive season.

Despite efforts by the Bank of Ghana to support the cedi, including a $20 million auction to Bulk Oil Distribution Companies (BDCs) and a $2 million injection into the spot market, the currency continued to weaken.

In the last week, the cedi lost 0.41% against the dollar, 0.41% against the pound, and 0.78% against the euro on the retail market. Although this represented a decrease from the preceding week’s depreciation, the overall trend remained concerning.

Looking ahead, there is optimism for a potential stabilization of the cedi. The recent approval of an $800 million cocoa syndication loan by Parliament and a $102.6 million budget support program from the African Development Bank for Ghana are expected to provide much-needed relief.