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Business & Finance

Cedis continues depreciation as 1$ now 11.2626 GHS

By : cd on 12 Jan 2023, 12:36     |     Source: christian ahorgah

Cedi

The abyssal performance of the Ghana Cedi continued its free fall on Wednesday at 11.2626 GHS to a dollar quotation as reported by Bloomberg indicates.

The Cedi last year lost half of its value against the dollar as the worst performance among 148 currencies tracked by Bloomberg.

Today, the Cedi traded at 11.2626 increasing 1.70000 or 17.35 percent since the previous trading session. Looking ahead, we forecast US Dollar Ghanaian Cedi to be priced at 10.56800 by the end of this quarter and at 12.47300 in one year, according to Trading Economics global macro models projections and analysts expectations.

Whereas, the Daily Interbank FX rates from the Bank of Ghana reveals the following:

 

What is causing the Ghana Cedi to depreciate?

Ghana’s President Nana Akufo Addo in October last year stated that the woes of the of the Ghana cedi was caused by low inflows of foreign exchange, as well as the activities of speculators and the Black Market.

In restoring the Cedis the Government of Ghana took these initiatives:

1) enhanced supervisory action by the Bank of Ghana in the forex bureau markets and the black market to flush out illegal operators, as well as ensuring that those permitted to operate legally abide by the market rules. Already some forex bureaus have had their licenses revoked, and this exercise will continue until complete order is restored in the sector;

2) Fresh inflows of dollars are providing liquidity to the foreign exchange market, and addressing the pipeline demand;

3) the Bank of Ghana has given its full commitment to the commercial banks to provide liquidity to ensure the wheels of the economy continue to run in a stabilized manner, till the IMF Programme kicks in and the financing assurances expected from other partners also come in;

4) Government is working with the Bank of Ghana and the oil producing and mining companies to introduce a new legal and regulatory framework to ensure that all foreign exchange earned from operations in Ghana are, initially, paid to banks domiciled in Ghana to help boost the domestic foreign exchange market; and

5) the Bank of Ghana will enhance its gold purchase programme.

 

Ranking Member on the Finance Committee of Parliament, Dr. Cassiel Ato Forson expects the Ghana cedi to inevitably depreciate further from January 2023 to June before a possible IMF board approval in Q2, 2023.

According to the Lawmaker, “The haircut on domestic bonds and Eurobond is expected to adversely impact the health of the banking sector, local businesses, and individuals! Also, Bilateral debt restructuring will lead to government’s foreign-financed projects being abandoned. Unemployment will worsen due to the freeze on employment, debt restructuring, poor business climate, and massive austerity. Ghana will default in the payment of interest and principal on domestic bonds, Eurobonds, and most of our bilateral loans in 2023” he wrote on Social media.