The Ghana Cedi has seen an appreciation against the US dollar in the past few trading days as a result of an increase in the supply of dollars by the Bank of Ghana. After the cedi depreciated to as low as GH¢16.42 against the US dollar on November 6, it has gained 2% to trade at ¢16.08 to the dollar as at the end of trading on November 14. The currency has lost 26% of its value to the US Dollar since the start of 2024.

The BoG Governor, Dr Ernest Addison, had said in October that the central bank had adequate reserves to intervene in the forex market if necessary. The bank’s Gross International Reserves stood at $7.5 billion as at the end of August 2024, a significant increase from the $5.09 billion balance recorded a year earlier. Part of the increase in the BoG’s reserves can be attributed to the strong performance of gold prices on the international market. Gold is up by about 24% year-to-date and is currently trading at about $2,567 per ounce.

Economist and Fixed-Income Strategist, Gameli Martey, estimates that the BoG has sold about $410 million on the market in the first 13 days of November 2024 compared to about $500 million from August to October. This has obviously had an effect on both the interbank market and the retail forex market.

It is currently unclear why the BoG has adopted this strategy, but an easing of the exchange rate depreciation could help to tame inflation which hit 22.1% in October and placed the BoG’s end-year target of 15% in doubt.