In nearly seven months of 2022, the cedi’s value relative to the US dollar decreased by 19.2%.
As of July 22, 2022, the local currency traded on the interbank market for 7.43 to the American “greenback,” according to the Bank of Ghana’s Summary of Economic and Financial Data.
On the retail market, it is selling for around 8.30 pesewas to the US dollar.
Some currency specialists have said that the major cause of the cedi’s volatility is a lack of dollar inflows, notably from Eurobonds.
Others concur, pointing to the government’s significant external borrowing costs as a fundamental factor.
In the first half of 2022, the Ghana cedi lost 16.86 % against the dollar on the interbank market but gained % in the retail forex market.
However, when the Bank of Ghana took tough monetary action and implemented some fiscal measures to stop the runaway decline in the first four months of 2022, the pace of cedi depreciation slowed down in May and June 2022.
In fact, the Bank of Ghana raised the policy rate in March 2022 by 2.5 percentage points, to 17 percent. Once more, it imposed regulations that boosted the Capital Adequacy Ratio to 13 percent, reset the Capital Conservation Buffer to its pre-pandemic level of 3 percent, and increased the Cash Reserve Ratio to 12 percent.
This action encouraged investors to put money into cedi-denominated assets while effectively controlling inflation and the money supply.
Investors were once again encouraged that economic managers were closely monitoring the factors influencing the cedi’s value.