The Ghana cedi experienced a slight depreciation against the dollar over the past week due to an increase in demand for the United States dollar to finance imports.
As reported by Bloomberg, the cedi has fallen by 4.8% since the start of the year, marking the most significant decline among 23 African currencies monitored by the organization.
Gabriel Engmann, a currency trader at GCB Bank Ltd. in Accra, stated via phone, “We are observing a rise in demand for dollars from companies to settle import bills, particularly following the Christmas season. While we do receive inflows from some clients, they are insufficient.”
Supported by a surge in gold prices and strong foreign reserves amounting to $13.8 billion, the cedi appreciated by 41% last year, representing its first annual increase since at least 1994, when Bloomberg began tracking this data.
This robust currency performance contributed to a decrease in inflation, which fell to 3.8% in January from 23.5% a year prior. Additionally, the central bank reduced interest rates by 1,250 basis points within a mere 10 months, bringing them down to 15.5%.
Nevertheless, demand for dollars remains strong at the central bank’s bi-weekly spot auctions, where it sells U.S. dollars to banks.
During Thursday’s auction, lenders submitted bids totaling $295 million, but the central bank only sold $125 million, as per the results reviewed by Bloomberg. Two days earlier, they aimed to acquire $356 million at an auction, and similarly, the regulator accepted $125 million for that event.
In response to inquiries last month, Bank of Ghana Governor Johnson Asiama remarked, “What we have is a managed floating system. Our goal is to ensure that the fluctuations are not excessive.”
