Cedi slips past GH¢11 amid forex strain

The Ghana cedi has breached the GH¢11 mark against the US dollar on commercial bank trading platforms, with some banks quoting rates as high as GH¢11.30, while others are selling at GH¢11.00.

In contrast, the Bank of Ghana’s official rate as of yesterday stood at GH¢10.90.

Meanwhile, forex bureaus are selling the dollar for around GH¢12.20.

Despite recent pressures, a Databank Research report ranks the cedi as Africa’s best-performing currency against the dollar, appreciating by approximately 36% year-to-date, though down slightly from over 40% earlier in August.

Commercial banks attribute the current volatility to limited dollar supply from the central bank and rising demand.

Importers are ramping up purchases ahead of the Christmas season, while others are buying dollars as a hedge against possible future shortages.

Data reveals the Bank of Ghana has scaled back its forex auction supply.

Earlier this month, commercial banks requested over $300 million, but only $100 million was supplied. Similarly, IC Securities reports that forward dollar sales in July fell by 53.6% compared to June.

Notably, the BoG was absent from the market on July 25 and 29, its first no-show since April.

John Awuah, CEO of the Ghana Association of Banks, says the industry is working with the central bank to address supply constraints and support new regulatory measures aimed at promoting the cedi as the primary transaction currency.

One such measure restricts large forex withdrawals not backed by deposits.

While the Bank of Ghana acknowledges the recent exchange rate pressure, it strongly denies any shortage of dollars.

Officials argue that part of the demand is speculative and not tied to real economic activity.

The BoG insists it has adequate reserves and will continue to intervene strategically, based on data rather than market sentiment.

It also ruled out fixing the exchange rate, emphasising that controlled fluctuations are a normal part of a market-based system.

The central bank cited progress in its crackdown on remittance inflow leakages, an effort that began after significant declines in April, as one of several measures now showing results.