Ghana: Ghanaian cedi falls to an all-time low in May
May 21, 2015
In May, the Ghanaian cedi (GHS) lost ground against the U.S dollar, thus continuing a trend that began in January of this year. The currency reached an all-time low on 21 May when it traded at 4.02 GHS per USD. The figure was 4.5% weaker than on the same day in the previous month and 36.0% weaker on an annual basis. The depreciation of the cedi underlines the economic difficulties that the country faces amid falling commodity prices and strapped government finances.
On 13 May, the Central Bank of Ghana hiked its monetary policy rate from 21.0% to 22.0% in an unexpected decision. Nevertheless, the move didn’t stop the currency from depreciating further. Looking forward, the Bank expects the higher interest rate to help the currency strengthen somewhat. However, the cedi will remain under pressure mainly due to a stronger U.S dollar and weak economic prospects on the domestic side.
Author: Dirina Mançellari, Senior Economist