by Adnan Adams Mohammed
Ghana’s fiat currency, the cedi has seen some time related stability on the forex market due to the inflows of the cocoa syndicated loan into the country.
The Bank of Ghana (BoG) received the first tranche of US$541million of the US$800 million Cocoa Syndicated Loan last week.
This has helped to stabilize the cedi which is now selling at GHC12.19 to the dollar. But any further delay in other expected inflows could change the narrative.
The current US$541 million cocoa syndicated loan would also help to improve the balance of payment as well as the country’s reserves.
According to the Bank of Ghana, the favourable external developments and tighter monetary policy stance have resulted in a relatively stable of the Ghana cedi in the year so far. Excluding the sharp depreciation of 20.6 percent in January, the Ghana cedi has cumulatively depreciated by 6.6 percent against the US dollar between February and November 20, 2023.
The relative stability in the foreign exchange market has largely been supported by inflows from the IMF ECF first tranche, the Ghana’s Domestic Gold Purchase Programme, as well as purchases of repatriated export proceeds from mining companies and oil and gas producers.
At the end of October 2023, the stock of Gross International Reserves (GIR) was US$5,150.2 million, enough to cover 2.4 months of imports of goods and services. This compares with GIR of US$6,252.7 (2.7 months) at the end of December 2022.
The level of reserves excluding pledged assets and petroleum funds, as defined under the IMF-supported programme, increased to US$2.5 billion (equivalent to 1.1 months of import cover) at the end of October 2023, from the December 2022 position of US$1.5 billion (0.6 month of import cover). This indicates a build-up of about US$1.0 billion, mainly driven by the Gold for Reserves programme.
The Bank of Ghana was expecting a total of US$1.650 billion by the end of this year which would help to improve the country’s balance of payment, support the stability of the cedi as well as the Gross International Reserves.
