Home Finance Dollar Hits ¢16 Cedis on Retail Market

Dollar Hits ¢16 Cedis on Retail Market

by Vesta Daily
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Dollar Hits ¢16 Cedis on Retail Market

The dollar is now selling at ¢16 in some forex bureaux, up from ¢15.90 just two days ago and ¢15 a fortnight ago. This increase persists despite recent measures and reassurances from Central Bank Governor Dr. Ernest Addison and Finance Minister Dr. Mohammed Amin Adam over the past week.

While the depreciation of the cedi is most pronounced in the retail market (forex bureaux), the interbank market is also feeling the impact. For the first time, the dollar exceeded ¢15 on the interbank market.

Trading opened between ¢14.93 and ¢14.99, but firms offering around ¢15.20 emerged before noon on Thursday, May 30, driven mainly by increased corporate demand for the US currency.

In the retail market, where many individuals turn when banks are unable to meet their dollar needs, the cedi has lost more than 20% of its value. The value of the dollar in 2024 began at about ¥12.20, surged to ~14 by the end of April, and hit ~15 by the middle of May. Right now, forex bureaus are selling it for GH¢16.

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The dollar started the year at about ¢11.88 on the interbank market, increased to ¢13.65 in early April, hit ¢14.70 by mid-May, and then surpassed GH¢15 today, May 30.

This was reiterated by the Central Bank Governor in a press conference on May 27, where he assured that “The Bank of Ghana has adequate reserves to manage these shocks to the foreign exchange market.”

The inadequate supply of dollars compared to the rising demand from importers and corporate entities is the main reason behind the Cedi’s depreciation. The ongoing increase in the value of the dollar is ascribed by the Central Bank to speculation.

For many, there are dire repercussions from the cedi’s sharp decline in value. Students who are enrolled in professional courses abroad find it difficult to collect extra money to pay in US dollars.

Mortgage holders see an erosion in their take-home pay due to growing monthly payments. Due to their reliance on the dollar, importers must pay higher tariffs in addition to needing more money to purchase goods. Because of the depreciation of the Cedi, the price of essential goods including petroleum products and various utility services has increased.

There is not much room for the Central Bank to issue dollars to the interbank market because the government is barely achieving its minimal Gross International Reserve, which covers three months of imports.

Following the Board’s evaluation of Ghana’s second program in June, $360 million is anticipated to be the next sizable inflow from the International Monetary Fund (IMF). But given that the Bank of Ghana’s recent intervention, which came close to $100 million, did not stop the cedi’s devaluation, analysts caution that this amount alone might not be enough to meet the growing demand for dollars.

Vesta Daily
Author: Vesta Daily

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