News Guide Africa

Tag: forex exchange

  • Gold boom, diaspora inflows propel Ghana Cedi to historic year-end rally …shattering three-decade seasonal volatility

    Gold boom, diaspora inflows propel Ghana Cedi to historic year-end rally …shattering three-decade seasonal volatility

    The Ghanaian local currency (cedi) has ended the 2025 fiscal year on its strongest footing in a decade, defying an at least 30-year seasonal depreciation pattern and emerging as one of the world’s top-performing currencies.

    Bolstered by a surge in global gold prices, increased artisanal gold production captured into the formal economy and robust year-end diaspora inflows, the cedi has provided substantial relief to a private sector long plagued by foreign exchange volatility.

    For decades, Ghana’s final quarter has been synonymous with a “forex squeeze” as importers rushed for dollars. However, 2025 marked a definitive shift, with market data revealing the local currency not only stabilised but actively reclaimed significant value against major global benchmarks.

    Performance measure

    The scale of the cedi’s recovery is stark when compared to the turbulent close of the previous year.

    Last week, the interbank market opened with the dollar at GHȼ11.50. By the start of the final week of December, the rate had sharpened to GHȼ11.11. This stands in sharp contrast to December 2024, when the dollar traded at a staggering GHȼ14.71. A similar trend was observed against other key currencies:

    Currency  Mid-Dec 2025  Year-End 2025  Year-End 2024

    US Dollar ($)  GHȼ11.50  GHȼ11.11  GHȼ14.71

    GB Pound (£)  GHȼ15.36  GHȼ15.00  GHȼ18.49

    Euro (€)  GHȼ13.47  GHȼ13.08  GHȼ15.33

    The ‘Golden’ Catalysts and Macroeconomic Maturity

    Economic analysts attribute this unprecedented gain to a “perfect storm” of positive fiscal indicators. Ghana benefited immensely from a current account surplus and a favourable balance in both capital and financial accounts, which strengthened the nation’s external buffer and allowed the Bank of Ghana (BoG) to maintain a more stable exchange rate regime.

    Two specific year-end factors played a pivotal role:

    The Diaspora Effect: Massive inflows of foreign exchange from Ghanaians returning home for the “Beyond the Return” festivities significantly boosted the local supply of foreign currency.

    Reduced Import Pressure: Businesses completed festive import cycles earlier than usual, leading to a decline in late-season forex demand.

    Meanwhile, the World Bank noted that the currency was further strengthened by tight monetary and fiscal policies, increased export revenues buoyed by higher prices of gold and cocoa, and improved market sentiment. The BoG’s “Gold for Reserves” and “Gold for Oil” programmes have been instrumental in stabilising foreign exchange supply.

    “The improved stability is offering relief to businesses that rely heavily on predictable exchange rates for planning, pricing and cross-border transactions,” noted a market observer, highlighting that the trend is expected to lower the general cost of doing business in the first quarter of 2026.

    Global Recognition and Local Impact

    The cedi’s rally was not merely a local victory but a global phenomenon. According to Bloomberg, the cedi posted a remarkable 41% appreciation against the greenback over the year—its first annual gain since at least 1994, when comprehensive data compilation began.

    This performance ranked the cedi as the second-best performer among 144 currencies tracked by Bloomberg, surpassed only by the Russian ruble.

    The local currency also finished the year as the 4th best performing currency in Africa, according to Forbes, with a value of GH¢10.93 per US dollar.

    For the Ghanaian business community, this stability is a lifeline. Importers, traders, and manufacturers can now plan and price goods with greater certainty, with market observers noting the trend is expected to lower the general cost of doing business in the first quarter of 2026.

    While the macroeconomic data paints a triumphant picture, the impact on everyday Ghanaians remains a topic of debate. The 41% climb has begun to stabilise the prices of imported essentials, though many households are still navigating the “price stickiness” of retail goods.

    As 2026 begins, the narrative surrounding the cedi has officially changed. For the first time in an entire generation, the local currency has demonstrated enduring resilience, offering cautious optimism that this trend signifies a permanent shift toward macroeconomic maturity.

    IMF okays Bank of Ghana intermediary role

    The International Monetary Fund in its recent Staff Report said the Bank of Ghana (BOG) is actively managing the foreign exchange market, while increasing its footprint.

    “Since program approval, the BoG has taken an increasingly active role as an intermediary in the FX [forex] market on the back of stronger BoP [Balanced of Payments] inflows”.

    It added that the Domestic Gold Purchasing Programme has been the key source of these inflows, which also included cocoa inflows and repatriation requirements on extractive sector export proceeds.

    Consequently, the Finance Ministry has been quick to assure stakeholders that this appreciation is “not a nine-day wonder” but the result of deliberate policy.

    With the next major debt restructuring payments due in mid-2026, the current strength of the cedi provides a crucial buffer for the nation’s treasury.

    As the first sun of 2026 rises, the narrative of the cedi has officially changed.

     

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

  • Cedi succumbs to market pressure …after a record 32% appreciation as at Nov 2025

    Cedi succumbs to market pressure …after a record 32% appreciation as at Nov 2025

    Ghana’s local currency (Cedi) has begun bowing to market pressure as demand for international trading currencies soars to cover the Christmas festive related imports as the year nears its end.

    The Cedi, which, a fortnight ago, rallied to exchange with the US dollar at below GH¢11, is currently exchanging at GH¢12.10 on the black market as at press time on Friday November 28, 2025, with momentum softening across both the interbank and retail FX markets.

    On the interbank market, the cedi closed at GH¢11.12 to one US dollar, reflecting a 1.80% depreciation from GH¢10.92.

    The pound, however, gained 1.26% to GH¢14.55 against the pound from GH¢14.37, while the euro edged up 1.49% to GH¢12.80 against the euro from GH¢12.61.

    The retail segment showed a similar trend, with the cedi losing 1.24% against the dollar to GH¢ 12.10 to a dollar from GH¢11.95.

    The pound advanced 2.22% to GH¢15.80 from GH¢15.45, while the euro gained 1.09% to GH¢13.80 from GH¢13.65.

    Databank Research, a local financial market analytic firm, expects the cedi to remain under mild depreciation pressure in the near term as forex demand continues to outpace supply across both the interbank and retail markets.

    “Seasonal pressures, particularly year-end corporate settlements and elevated import demand, are likely to keep the currency on the defensive in the coming weeks. In the coming weeks, we anticipate volatility to be contained ahead of the anticipated US$385 million IMF [International Monetary Fund] disbursement in December 2025, which, following the October staff-level agreement, should proceed smoothly”.

    It added that the inflow is expected to bolster reserves and temper depreciation pressures, offering modest support to the cedi as liquidity conditions improve.

    Cedi records 32% appreciation

    According to the Bank of Ghana’s November 2025 Summary of Economic and Financial Data, the cedi has recorded a 32.2% appreciation against the US dollar in the 11 months of 2025.

    This is compared with 34.4% appreciation in October 2025 and 18.4% in September 2025.

    It also appreciated by 18.8% to the euro on the interbank market in November 2025, going for GH¢12.80. However, it lost huge value between July and September 2025.

    For the pound, the cedi also gained 26.4% in value. It consequently sold at GH¢14.55 on the interbank market.

    On the interbank market, the cedi closed at GH¢11.12 to one US dollar, reflecting a 1.80% depreciation from GH¢10.92.

    The retail segment also showed a similar trend, with the cedi losing 1.24% against the dollar to GH¢ 12.10 to a dollar from GH¢11.95.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • Cedi set for historic rebound …as it appreciates 36% YTD

    Cedi set for historic rebound …as it appreciates 36% YTD

    Ghana’s local currency, the cedi, is poised to make history as it records its first-ever annual appreciation against the US dollar since its redenomination in 2007.

    According to Bloomberg data, the Cedi has appreciated by about 16 percent against the U.S. dollar from the start October to date, erasing the third quarter depreciation of 14 percent.

    Data from commercial banks now show that the cedi’s year-to-date (YTD) appreciation stands at 37%. This shows a stark contrast to the average annual depreciation of 14.9% between 2008 and 2024.

    A closer analysis of price quotes from commercial banks since the start of the year also revealed that within a single week from October 13 to 17, 2025, the cedi appreciated by 9.5% against the dollar. The cedi’s remarkable turnaround is attributed to a combination of disciplined monetary policy, enhanced foreign exchange inflows, and record interventions by the Bank of Ghana. Strong inflows from gold and cocoa exports, as well as improved fiscal management under the IMF Extended Credit Facility (ECF) programme, have also contributed to the cedi’s surge.

    The cedi’s performance has long been a key barometer of Ghana’s economic health, often influencing inflation expectations, credit ratings, and investor sentiment. The start of the last two IMF programmes, implemented in 2015 and 2023 respectively, both coincided with periods of sharp currency depreciation.

    “I’ve seen this for many years. I started central banking some 30 years ago. The phenomenon [of dollarisation] has been there, and so we are tackling it to make the local currency the sole legal tender,” Bank of Ghana Governor, Dr. Johnson Asiama, speaking at the IMF/World Bank Spring Meetings in Washington, said noting that, his tenure is focused on building a central bank that is “agile and future-ready” while making the cedi the currency of choice for domestic transactions.

    He acknowledged that dollarisation remains a major challenge, noting that the widespread use of foreign currency undermines the effectiveness of monetary policy and weakens confidence in the cedi. Nonetheless, he expressed optimism that the reforms underway will consolidate gains made so far.

    Key Factors Driving the Cedi’s Appreciation:

    The Bank of Ghana’s strategic interventions in the foreign exchange market have helped stabilize the currency as well as facilitate record foreign exchange inflows.

    Ghana’s total export revenue is projected to reach US$25 billion in 2025, a 30% increase compared to the previous year, with gold exports expected to account for over 60% of the total.

    Also, the government’s commitment to fiscal discipline and economic reforms has boosted investor confidence alongside the IMF’s Extended Credit Facility programme which has provided financial support and stability to Ghana’s economy.

    Outlook

    The cedi’s appreciation has strengthened Ghana’s credit outlook, with the debt-to-GDP ratio falling below 50% for the first time in years.

    Dr. Asiama has expressed optimism that the reforms underway will consolidate gains made so far and make the cedi the currency of choice for domestic transactions

    According to the Ghana Association of Banks, a key factor has been the Bank of Ghana’s decision to revise its forex market interventions, moving from weekly auctions to spot sales for commercial banks, enhancing market efficiency.

    Its Chief Executive, John Awuah, told Joy Business that the cedi’s rebound reflects “recent market developments,” also linking the performance to the Bank of Ghana’s review of the Net Open Position (NOP) for commercial banks.

    Market analysts further believe that the cedi’s strength is being supported by tight fiscal and monetary policies, rising export revenues, and improved investor confidence.

    They also argue that, given recent market reforms, the cedi’s strong performance may not end anytime soon.

    Central Bank’s FX market intervention

    Earlier this month, the Governor of the Bank of Ghana, Dr. Johnson Asiama, announced that the central bank would begin foreign exchange (FX) intermediation under the Domestic Gold Purchase Programme from October 2025, with plans to sell up to $1.15 billion during the month.

    These sales are being conducted on a spot basis through twice-weekly, price-competitive auctions open to all licensed banks.

    Dr. Asiama explained that the initiative aims to deepen the interbank FX market, enhance price discovery, and reduce volatility all while maintaining transparent and market-neutral operations.

    He emphasised that the overarching goal remains to stabilise the exchange rate, ensure a level playing field, and support sustainable liquidity in the banking system.

    BoG to achieve full de-dollarisation

    Consequently, Dr Asiama notes that one of his top priorities is to end the long-standing reliance on the U.S. dollar for domestic transactions.

    He wants to make the Ghana cedi the sole currency of trade and payment in the country describing the persistence of dollar use in Ghana’s economy as a structural weakness that undermines the effectiveness of monetary policy.

    “So, my mandate is clear to achieve price and financial stability. It’s been eight months now. I believe we are on course. We are on course towards achieving that. But a couple of things bother me.

    “First of all, the issue of dollarisation. You know, I’ve seen this for many years. I started central banking some 30 years ago. The phenomenon has been there, and so we are tackling it,” he said.

     

    By Adnan Adams Mohammed

     

     

  • FX market works in reaction to prevailing conditions … BoG dismisses charges of manipulation

    FX market works in reaction to prevailing conditions … BoG dismisses charges of manipulation

    Bank of Ghana has denied allegations that it has manipulated the foreign exchange market, noting that, currently that market is controlled by commercial banks.

    It notes the Central bank only intervenes for general economic stability purposes, stressing that its actions fall squarely within a flexible exchange rate framework aimed only at curbing excessive volatility.

    The Governor of the Bank of Ghana, speaking at the IMF–World Bank Governor Talk Series in Washington, D.C., explained that while the Bank occasionally intervenes to stabilise the cedi, such actions are reserved for periods of exceptional market pressure.

    “The framework that we have is a flexible exchange rate management framework. Essentially, what we do is smoothen excessive volatilities,” Dr. Johnson Asiama explained.

    Addressing concerns about the scale of intervention, he said: “Yes, there were allegations about whether we were intervening in the market, but that was not exactly the case,” noting that significant foreign outflows had required short-term support from the central bank.

    According to Dr. Asiama, between the second and third quarters of 2025, Ghana undertook several “lumpy” foreign payments, including billions of U.S. dollars to Independent Power Producers (IPPs) and domestic bondholders who exited their holdings amid the cedi’s appreciation.

    At the same time, remittance inflows weakened, draining liquidity from the interbank foreign exchange market.

    “In the mix of that, the central bank had to step in. The interbank FX market had dried up, so the central bank had to provide that support,” he said.

    Dr. Asiama added that market conditions have since improved, thanks to directives requiring mining firms to channel all foreign exchange inflows through commercial banks — a measure that is already showing positive results.

    “We do not over-support the market at all. What we seek to do is limit volatility to ensure smooth dynamics in the market, and that is the framework we will maintain going forward,” he affirmed.

    Dr Asiama further noted that recent pressures on the foreign exchange market were triggered by large energy sector payments and investor exits, not by direct market intervention from the Central Bank. He emphasized that the Bank had to undertake a series of “lumpy” foreign exchange payments between July and August to clear long-standing energy debts and other domestic obligations.

    “Yes, there were allegations about whether we were intervening in the market. But that was not exactly the case,” he explained.

    The Governor’s remarks come amid renewed public scrutiny of the Bank of Ghana’s foreign exchange management practices and growing interest in the country’s energy sector debt, which continues to weigh heavily on fiscal stability.

    “Between the second and third quarter, we had to do a number of lumpy payments. There were all these large arrears in payments to some of the IPPs. These were billions of US dollars.”

    He revealed that the Central Bank also faced additional outflows from some domestic bondholders who decided to liquidate their investments after the cedi appreciated.

    “We also had some of the domestic debt-affected bondholders who wanted to exit. They felt that because the currency had appreciated, it was the right time to take up their investment. We had to allow them to go,” he said.

    The Bank of Ghana Governor said those combined pressures temporarily tightened liquidity in the foreign exchange market.

    “We did a lot of lumpy payments between July and August, and you might have seen some of that,” he noted.

    Dr. Asiama also disclosed that the situation coincided with a decline in remittance inflows, which typically provide over US$6 billion in annual forex injections.

    “Because all these inflows accrue to the central bank, and it was happening at a time when we saw some decline in remittance inflows, the central bank needed to step in to meet all those lumpy payments,” he said.

    According to him, the interbank foreign exchange market “had dried up” during that period, forcing the Bank of Ghana to provide temporary support.

    “The central bank needed to provide that support. But I’m happy to say that the interbank FX market has come back,” DrAsiama said.

    He explained that the central bank has since written to mining firms to route their inflows through commercial banks to improve liquidity in the FX market.

    “We are beginning to see some pick-up in interbank FX market activity,” he said, clarifying that the directive covers all commodities except gold.

    The Governor stressed that with improved market conditions, the central bank no longer needs to be heavily involved in supplying dollars.

    “As of yesterday, we had committed to make available US$150 million. This morning, when I checked, the market had picked up only US$90 million, so US$60 million automatically goes into our reserves,” he said.

    “Same thing Tuesday — we made available US$150 million, and the markets picked up less than half that. So automatically, it goes into our reserves.”

    He dismissed claims that the Bank was over-supporting the market.

    “We do not over-support the markets at all. All we seek to do is to limit volatility and ensure smooth market dynamics. That’s the framework we will maintain going forward,” Dr Asiama emphasized.

     

    By Adnan Adams Mohammed

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • BoG sells US$243mn in FX forward auction, highest since beginning of 2025

    BoG sells US$243mn in FX forward auction, highest since beginning of 2025

    The Bank of Ghana (BoG) has sold one of its highest amounts of dollars for the market through a single 7-day FX forward auction.

    Market data seen by JOYBUSINESS showed that the Bank of Ghana last week, through its FX Forward Auction, offered US$ 300 million.

    However, the commercial banks just accepted US$ 243 million, with a price range of between GHc 12.15 and GHc12.40.

    Market Response

    Some commercial banks told JOYBUSINESS they expect the cedi to trade steadily against the dollar in the coming days, buoyed by the central bank’s intervention.

    However, despite a pick-up in interbank activities since August 2025, only about US$4 million was reported to have changed hands among participants last Wednesday.

    The intervention comes shortly after President John Mahama announced at a recent media engagement that the BoG had withdrawn routine interventions in the forex market, stressing the need to strike a balance between supporting exporters and not overburdening importers.

    At the most recent Monetary Policy Committee press briefing, in mid September, Governor Dr Johnson Asiama assured that commercial banks have been adequately supplied with dollars to meet market demand.

    Checks by JOYBUSINESS also show that the cedi’s rate of depreciation has slowed in recent weeks, though it remains unclear whether BoG’s latest intervention is the main driver.

    BoG on declining FX forward auction

    The Bank of Ghana had started reducing the volume of dollars sold through its FX Forward Auction programme after the second quarter of 2025.

    Market data revealed that in August 2025, BoG sold US$737 million through spot and forward auctions representing an 18% drop from the US$900 million-plus sold in July.

    Market analysts say this trend highlights BoG’s deliberate scaling back of its interventions.

    Cedi Pressure to Ease Soon

    The Bank of Ghana has expressed optimism that current pressures on the cedi will normalise soon, backed by new monetary measures aimed at boosting forex inflows for commercial banks.

    Director of Research Dr Philip Abradu-Otoo disclosed on PM EXPRESS BUSINESS EDITION that the Central Bank’s directive requiring mining firms to channel their dollar inflows through local banks has already eased liquidity challenges.

    “We have also seen remittances pick up after recent regulatory intervention, and all of these should go a long way to improve supplies on the market,” Dr Abradu-Otoo stated.

    He added that cocoa inflows and expected donor disbursements in the coming months will further strengthen forex supply.

    “All these inflows should go a long way to improve the supply situation when it comes to the forex market,” he stressed.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • BoG goes hard on banks to curb forex crunch as traders raise alarm

    BoG goes hard on banks to curb forex crunch as traders raise alarm

    All banks, Dedicated Electronic Money Issuers (DEMIs) and Enhanced Payment Service Providers (EPSPs) have been directed to submit detailed weekly reports on inward remittance transactions.

    According to the Bank of Ghana (BoG), this is expected to curb foreign exchange violations as financial institutions are obliged to provide daily logs of individual remittance transactions for each Money Transfer Operator (MTO), alongside the total daily foreign exchange credited into their respective Nostro accounts.

    This is to enhance transparency, accountability, and regulatory oversight within the foreign exchange and remittance ecosystem.

    “The move is in line with its responsibility to safeguard the integrity and stability in the country’s FX market and to ensure compliance with the Updated Guidelines for Inward Remittance Services”, the Governor of the Bank of Ghana has said during the 125th MPC press briefing.

    Institutions that fail to submit accurate and timely reports risk regulatory sanctions, such as, revocation of remittance licenses or termination of partnerships with non-compliant institutions as it intensifies enforcement efforts.

    “Note that failure to submit accurate and timely reports constitutes a regulatory breach under Section 42 of the Payment Systems and Services Act (Act 987) and Section 93(3) (d) of Act 930 and will attract the appropriate administrative sanctions”, the BoG said in a statement July 29, 2025.

    The directive follows continuous breaches of FX rules by certain banks and remittance partners, including the use of unapproved channels, unauthorised forex swaps and the application of unofficial exchange rates.

    Consequently, the Importers and Exporters Association of Ghana has raised serious concerns over persistent foreign exchange (forex) access challenges, despite the recent appreciation of the Ghanaian Cedi against major international currencies.

    In a press statement issued last week, the Association noted that businesses continue to struggle to obtain forex through commercial banks, pushing many to turn to the black market, where foreign currency is more accessible but at significantly higher rates.

    “It is disheartening that while the Cedi has seen some level of appreciation, businesses continue to face significant hurdles in sourcing forex from traditional banking institutions,” the statement read.

    “This situation has compelled many legitimate importers and exporters to resort to the black market, where forex is traded at inflated rates, worsening the cost of doing business and undermining macroeconomic stability.”

    The Association referenced recent media reports highlighting ongoing dollar shortages and the increasing influence of informal currency dealers often referred to as “Abokis” accused of hoarding forex and manipulating market prices.

    The regulator is asking financial institutions to strictly adhere to the following guidelines:

    i. The funding of the Local Settlement Account should be strictly done in accordance with section 7.1 (c) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers.

    ii. Ensure that all disbursements shall be from the Local Settlement Account as stated in section 7.2 (a) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers.

    iii. DEMIs/EPSPs should ensure that pre-funding arrangement with the Settlement Bank shall be done in accordance with section 7.2 (b) of the Updated Guidelines for Inward Remittance Services by Payment Service Providers.

    By Adnan Adams Mohammed

  • BoG decry allegation of conspiring with third forces to transfer funds offshore

    BoG decry allegation of conspiring with third forces to transfer funds offshore

    The Bank of Ghana has debunked allegations by the Director of Research at the Ghana Trades Union Congress (GTUC), Dr. Kwabena Nyarko Otoo, that it is collaborating with some operatives at Cow-lane in Accra to illegally transfer funds offshore.

    The Central Bank says it vehemently denies the said allegations and also considers them extremely reckless.

    “We would have expected that such strong allegations would have been supported by the requisite evidence, and not left at pure conjecture, mere suspicion or hearsay. This is especially so considering the quarters from which the allegations were made”, it pointed out.

    Dr. Kwabena Nyarko Otoo according to the BoG passed the unfortunate remark about the Central Bank.

    “We advise the general public to completely disregard these comments and be assured that we, as a Central Bank, are focused on our mandate of price stability, and doing all within our power to reduce the rising general level of prices. We are doing this guided by our core values of accountability, professionalism and integrity, and in accordance with law”.

    The Bank of Ghana also noted that it is working with other stakeholders including law-enforcement agencies to discourage and sanction persons who engage in illegal foreign exchange activities in the country.

    The Central Bank, however, “advises the public to desist from making any such unfounded allegations in the future and to crosscheck same with Bank of Ghana”.

    The Central Bank also disclosed it is working with the law enforcement agencies to penalise illegal foreign exchange operators.

     “Bank of Ghana is also working with other stakeholders including the law enforcement agencies to discourage and penalise the activities of illegal foreign exchange operators in the country,” the BoG said.

    It also advised “the public to desist from making any such unfounded allegations in the future and to crosscheck same with Bank of Ghana.”

  • Interbank and forex bureau dollar rate differentials almost 14%

    Interbank and forex bureau dollar rate differentials almost 14%

    Adnan Adams Mohammed

    The foreign exchange rate of the U.S dollar to the Ghanaian cedi is trading at GH¢7.43 to US$1.0 on the interbank market as against GH¢8.32 to a dollar on the retail market (forex bureau) as at last week, July 25, 2022.

    This peg the difference in the market rates at about 14 percent or GH¢1.0.

    However the Summary of Economic and Financial Data by the Bank of Ghana, has indicated that, the cedi lost 19.2% in value to the US dollar in almost seven months of 2022.

    Some currency analysts have attributed the lack of dollar inflows, particularly Eurobonds as the main reason behind the volatility of the cedi.

    Others also believe the huge interest payments on borrowed funds (external) by government is a major reason.

    The Ghana cedi depreciated by 16.86% in value to the dollar in the first half of 2022 on the interbank market, but over 20% on the retail forex market.

    However, the rate of depreciation of the cedi slowed down in the May 2022 and June 2022, after stern monetary actions from the Bank of Ghana coupled with some fiscal measures to halt the free fall in the first four months of 2022.

    Indeed, the Bank of Ghana increased the policy rate by 2.5 percentage points to 17% in March 2022. Again, it enforced measures such as the increase in the Cash Reserve Ratio to 12%, the reset of the Capital Conservation Buffer to the pre-pandemic level of 3% and increased the Capital Adequacy Ratio to 13%.

    This move encouraged investors to invest in cedi-denominated assets, whilst inflation and money supply are effectively controlled.

    Again, investors were reassured that managers of the economy were keeping close eye on the causes of the value of the cedi.

  • Standard Bank predicts economic growth of 6.2% in 2022 amidst low Eurobond market access

    Standard Bank predicts economic growth of 6.2% in 2022 amidst low Eurobond market access

    Adnan Adams Mohammed

    The parent company of Stanbic Bank, Standard Bank, has predicted an economic growth of about  6.2% in 2022 and subsequently grow by 6.8% in 2023 amidst tough times for the Ghanaian economy.

    The prediction, in the latest report of the Bank, is in line with the forecast by International Monetary Fund which also pegs the growth rate of the country at 6.2% in 2022. It said the government has made significant progress in vaccinations and the further easing of COVID-19 restrictions will stimulate demand and supply within the economy.

    But, it pointed out that the country’s ability to tap the Eurobond market may further diminish, whilst the foreign exchange reserves could remain under pressure unless the government acquires alternative sources of external financing. 

    “As global risk may worsen further in the first-half of 2022, and Ghana’s ability to tap the Eurobond market may further wane. Foreign exchange reserves could remain under pressure in 2022 — unless the government acquires alternative sources of external bilateral and multilateral funding.”

    Reporting on the performance of past year’s performance, the Bank estimated that, on a quarter-on-quarter basis, the mining and quarrying sub-sector grew by 16.9% in 2021, from an average contraction of 10.7% in the 6 months to June 2021, implying that growth momentum may be recovering.

    “On a quarter-on-quarter basis, the mining and quarrying sub-sector grew by 16.9%, from an average contraction of 10.7% in the 6-m to Jun 21, implying that growth momentum may be recovering. Gold production from underground ore sources should commence from January 22, 2022 at the Obuasi mine. New contracts to conduct mining activities at the Bibiani mine have already been awarded, which should boost investment in the sector over the next few years.”

    “However, ongoing global supply chain challenges could restrain growth in the cocoa and industrial sub-sectors in 2022″, it added.

     Balance of payments – imports likely to be higher

    The report said the Current Account deficit is likely to widen to 5.0% of Gross Domestic Product (GDP) in 2022, from an expected 3.9% for 2021.

    “Whereas we expect a recovery in gold production and exports over the coming year, we simultaneously also see a notable rise in the imports of goods. As the economy continues to recover from the pandemic, non-oil imports may increase further. Also, given the government’s expansionary fiscal policy stance, capital goods imports will likely remain elevated over the next two year. Higher international oil prices too could continue to widen the trade balance.”

    Furthermore, “cocoa production and exports could still be dragged lower due to fertiliser shortages. As of Q2:21, cocoa and gold exports combined accounted for around 55.3% of total merchandise exports.”